In 2011, with great fanfare, the state legislature enacted what was quickly termed a two percent tax cap for municipalities and school districts across the state. Sounds simple, right? But as municipalities, school districts and taxpayers work through the first year under the new legislation, they are finding the new rules are not so self-explanatory. The seductive idea of a limit on our taxes makes it easy to conclude that our tax bills will be “capped” at a two percent increase when that is not what this law promises. Here’ s why.
*The two percent cap limits the total tax levied by the school district for certain operating expenses.
*The two percent cap is NOT a cap of two percent on the tax levy increase. Since some expenses of the district are not subject to the cap, the allowable tax levy for the Mamaroneck school district for the 2012-13 school year is 2.53 percent.
*The two percent cap is NOT a limit on the tax increase billed to each taxpayer. Individual tax increases can be higher or lower than the increase of the total tax levied by the district since tax certioraris and reassessments continually change the size of the aggregate assessment “pie,” changing each taxpayer’s “slice” of the tax levy accordingly.
For example, if the taxpayer’s assessment remains the same, but several of his neighbors’ assessments were reduced, his share of the total tax would be slightly higher. Conversely, if the taxpayer’s assessment was reduced and everyone else’s assessment remained the same, his share of the total tax would be slightly lower.
The annual school budget is comprised of three major elements:
- Contractual Obligations - The District has employment contracts with five separate bargaining units, including the Mamaroneck Teachers’ Association, covering many areas required by law, such as salaries, retirement benefits and health care. The total cost of these contracts exceeds 80 percent of the annual school budget.
- Mandates - The state requires that districts provide a variety of services, such as transportation. Only a small portion of these costs are reimbursed. The total combined cost of these mandates and the contractual obligations exceeds 90 percent of the annual budget.
- Non-mandated Programs and Services - These include such programs as kindergarten, sports, art, music and numerous high school elective classes. Together they comprise an important element of the quality education for which the District is well known and which it has been providing for decades.
In addition to taxes, the District has partially funded its expenditures through a variety of revenues, such as state aid and facilities fees. The world economic crisis of the past few years has adversely affected these revenues, causing all districts to look to increased tax revenues to cover the shortfall.
The District has worked diligently within its authority to control costs, including the elimination of some 56 staff positions since 2009. However, the built-in increases in mandated and contractual expenses continue to exceed the savings, causing the tax rate to increase, although at a substantially lower level than in past decades. For this reason, the Superintendent’s Recommended Budget for next year reflects a 2.07 percent increase in the tax levy, but a 3.43 percent estimated increase in the tax rate.
This series is written by members of the Communications Committee of the Citizen’s Financial Advisory Committee (CFAC), a committee of volunteers from the community who are lending their financial expertise to the School Board and administration. As we approach the May 15 school budget vote, we will examine the new rules and explain aspects of the school budget process that we have come to understand through our work on this committee.