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New York State Increases Property Tax Cap

August 16th

In late June, New York state lawmakers passed a property tax cap bill designed to limit to 2 percent, or the rate of inflation (whichever is less), the rate by which a government entity can increase it’s annual tax levy. This bill applies to all state and local governmental agencies, though there are a significant number of exemptions that may be exploited.Advocates of the cap claim it is a crucial step toward reversing the economic downturn in many parts of the state, as well as an active means of keeping many New York homeowners from foreclosure. There is also a sense among the bill’s supporters that it will be a positive force for keeping the state within its budget, since the cap will force the government to act within its means and not rely upon the potential for tax increases.

Stretching the Tax Cap

As predicted by many critics of the property tax cap, many local governmental organizations have struggled to make ends meet with limited resources. Since the passage of this new cap on state tax levies, cities, counties and school districts have been struggling to cope. In many cases local officials have grappled to come up with ways of stretching loopholes in the law as far as possible.

For example, at a recent meeting of the Peekskill Common Council, city officials openly discussed exemptions that would allow them to raise the cap on the local tax levy from 2 percent up to 5.9 percent. Other counties have discussed similar measures, including referendums designed to override the cap.

Many analysts predict that, like in Massachusetts (where the property tax was capped at 2.5 percent), communities will only struggle more as time goes on. In Massachusetts many communities were forced to lay off teachers, firefighters, and other public service workers, as well as shut down libraries and senior centers. Many fear that New York can only expect a similar fate under this property tax cap bill.

 
 
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