More bad news brewing on tax caps

Shelter Island officials aren’t taking too seriously a statement on the tax cap issued by State Comptroller Thomas DiNapoli. Mr. DiNapoli said last week that the original 2 percent cap on annual tax raises by municipal and school districts will be set at 0.73 percent for those municipalities operating on the calendar year for 2016.

“Local government officials need to brace for the lowest growth in their property tax revenue in the tax cap era,” Mr. DiNapoli said.

Although his statement doesn’t yet include the Shelter Island School District because its budget runs from July 1 to June 30, there are similar pronouncements for school districts every year, according to Superintendent Leonard Skuggevik. Actual caps have not necessarily reflected the projected numbers, he said.

Mr. DiNapoli estimated that more than 1,800 municipal entities will have about $88.3 million less in tax levy growth next year than they did this year.

This year, the tax cap factor was 1.56 percent, while it was 2 percent for 2012 and 2013.

As for school districts, the comptroller said the impact of a possible 0.73 tax cap for the next fiscal year could range from a loss of $188 million to a loss of $333 million less than they would have had if the factor remained at 2 percent.

Supervisor Jim Dougherty has railed against the tax cap, and the Town Board has voted to overide the mandate.

But Mr. Dougherty said the policy “served a good purpose in getting poorly managed school systems and towns to shape up.”

Still, the tax cap has never been “terribly relevant for well-managed towns,” Mr. Dougherty added.

In recent months, he’s pointed out what he sees as an impossible task­ — to keep within the 2 percent tax cap — when expenses beyond the town’s control must be paid. Those include not only unfunded state and federally mandated services, but also contractual agreements, health care premiums, fuel oil and gasoline prices.

Similarly, Mr. Skuggevik and the Board of Education have made it clear that while they haven’t previously pierced the tax cap, they envisioned it would be impossible to stay within the mandate for the 2016-17 budget.
Similar to the town, it’s those rising costs over the which the district has no control.

Mr. DiNapoli predicted officials would have to “operate differently under these new limits” making “even tougher budget choices.”

Among those, he said, would be cutting staff, delivery of services, fund balance reductions and deferral of capital and infrastructure projects.

While taxpayers don’t want to see their public officials hoarding a lot of money for a rainy day in fund balances, they also don’t want to have their supervisor and Town Board or Board of Education returning, hat in hand, asking for a referendum to collect more money to handle an emergency situation not foreseen at budget time.
Highway Superintendent and Public Works Commissioner Jay Card Jr. has already shared the results of an infrastructure study showing how much more expensive it will be, for example, to pave roads, if they’re allowed to further deteriorate instead of repairing them prior to complete collapses.

He and Town Engineer John Cronin can certainly be expected to repeat their request of a year ago to create a fund to tackle projects on a routine maintenance basis instead of waiting for a crisis.

Whether the Town Board will respond at a time when it has numbers on road repairs remains to be seen.

The school is awaiting State Education Department of its repairs to an aged and barely functioning heating and ventilation system and other repairs. It already has voter approval to bond for some of the work while other work is to be done on a performance contract, guaranteeing it will save as much or more in energy costs over the life of the project than what it costs to do the work.

Mr. Skuggevik said that while Mr. DiNapoli is calling for cutbacks in capital projects, those districts that have held the line on spending so far are going to find themselves “impacted even more. There are clearly going to be tough times ahead for all school districts when it comes to the budget process.”