Asharoken Says Yes To The Tax Cap

Asharoken Mayor Patricia Irving and the Village Board of Trustees chose not to override the new tax cap law on local governments. Last June, the New York State Legislature enacted Governor Cuomo’s proposal to establish a 2% tax levy limit on all local governments and school districts beginning in 2012.

The law allows local governments to override the annual cap. Most municipalities across Long Island and New York State have voted to override the cap. Without such an override, local governments are restricted to increasing their tax levy no more than the lesser of 2% or the rate of inflation.

Mayor Irving stated, “The tax cap law, as written, can be either cumbersome or a farce if a municipality votes to override the cap. However, the cost of government and annual cost increases are getting out of hand. We have to start somewhere.”

A municipality can override the tax cap limit by merely passing a local law, after the public hearing, authorizing the legislative body to override the cap. Asharoken chose to not even schedule a public hearing. Without the override law, the tax levy is limited to a 2% increase. If that is exceeded, there are serious fiscal consequences for the municipality in the future. Any tax levy in excess of the cap is required to be placed in reserve and further limit tax increases in the future. A municipality when computing the tax cap can exclude certain uncontrollable costs from the tax cap calculation. This includes pension contribution increases in excess of 2% and tort judgments against a municipality in excess of 5%. Most municipalities on Long Island have been passing local override laws to avoid being bound by the limitation or the consequences if they exceed the 2% limit.

“The ability to override the cap and the calculations of exclusions make the intent of the law useless. There are no restrictions on a municipality to limit those increases once they have passed the override law. The calculations make it even more confusing for the public”, Irving stated.

Municipalities can effectively raise taxes far more than the 2% and still stay with the limitations of the law. For example, the neighboring Village of Northport voted to override the law, stayed within the 2% cap but Village taxes increased 4.67%.

Mayor Irving said, “The law has the right intent but may be unreasonable for many municipalities. Some local governments, particularly small ones like the Village of Asharoken have unusual expenses in one year but not in others. The blanket right to override each year does little to limit municipal spending. Municipalities need an ability to override the cap but doing it year after year does not stop run away tax increases. Asharoken’s Board decided from the outset of this year’s budget preparations that we would abide by the cap, and likewise any tax increase.”

Asharoken’s proposed budget calls for a 1.86% tax increase.