Village Prepares for Two Percent Cap

Like any other municipality in New York State, Northport Village is grappling with the issues inherent in the new two percent property tax cap, which goes into effect beginning in 2012. The Village’s fiscal year runs from March 2012 through the end of February 2013. A pdf of a workshop on the tax cap is attached.

Trustee Henry Tobin says there’s a lot of confusion as to what the property tax cap means. “It does not mean that people’s individual property tax cannot go over two percent,” Tobin explained. “The total tax levy that’s taken in cannot exceed two percent.”

Using the current $12.6 million budget as an example, Tobin says $9.6 million of that amount is derived from property taxes.  That’s the amount which can’t exceed two percent or the rate of inflation, whichever is less.  Dividing that number by the assessed value of the Village results in the tax rate, which can be either higher or lower than the levy. That’s where Tobin says the confusion lies with residents.

As with school taxes, the tax cap on Village property taxes can be overridden, but with one key difference: voters don’t have a say. Two thirds of the Village Board’s trustees would need to veto it.

Budget workshops which are open to the public will begin in the next couple of weeks. “We’ve started meetings at 5 a.m.,” Tobin says, adding that it all depends on everyone’s schedule.  “Our goal is to have a public hearing on the budget the first week in January.” A final budget must be adopted by Feb. 1.

Tobin acknowledged that the last two budget discussions involved “vigorous” debate which resulted in 6.4 percent and 5.9 percent respective increases.   Many options were discussed, including dissolving certain departments and receiving police services from Suffolk Police. “I think it’s fair to say that both years everybody left the room frustrated, as were we,” Tobin says, adding that he felt the general consensus was that there was nothing more that could be done.

As usual, certain information is still pending at this point in the year, including the cost of health insurance increases and pension contributions which are mandated. Half of the increases in the budget, Tobin says, can be attributed to mandates which restrict the Board’s ability to reduce taxes.

Complicating matters this year is the need for the Board to present preliminary budget numbers online to the State Comptroller’s Office which reviews the budget to see if the two percent cap is being met. Tobin says the Village will allow for enough time in the schedule to accommodate that step.

To increase transparency, Tobin says the Board has approved his suggestion to identify each budget line to indicate whether it’s discretionary or mandatory. For instance, those pension costs would be marked as mandated. However, garbage removal is a contracted cost. When that contract is up, the amount would be re-negotiated, which would make it a “discretionary” cost.

Revenue items would be treated the same way. Most, Tobin says, are out of their hands but the Village still has some flexibility in the amount that’s charged for fees and fines.

“The basic thing we’ve done, and what we try to do is to be completely clear on what is happening with the money.”