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Chan

ngestotheN
NewYorkSttateTaxCap
p:
Wha
ataretheyan
ndwhatisthepotentialb
benefittosch
hooldistricts??
A
ANYSASBOR
ResearchNote
e
TTheNewYorkkStateAssociationofScho
oolBusinessO
Officials(NYSA
ASBO)hasad
dvocatedforaadjustmentsttotheTax
C
Capsinceitsiinceptionthatwouldbette
erbalanceth
hestatestwinnprioritiesoffprovidingtaaxreliefandiimproving
eeducationalo
outcomes.To laythegroundworkforp
potentialchanngestotheTTaxCap,that wereindeed
dactedon
tthisyearbyth
heLegislature
e,NYSASBOd
didtwoimporrtantthings.
FFirst, NYSASB
BO together with the Rocckefeller Insttitute of Govvernment held a school ffinance symp
posium in
SSeptember 20
014 entitled Balancing Educational Exxcellence witth Tax Relief that discussed how oth
her states,
n
notably Masssachusetts an
nd New Jersey, have instittuted tax capps and raised
d student ach
hievement. TThe event
w
wasattendedbystatepolicymakers,othereducationalassociatioonsandschoo
oldistrictlead
ders.
nof
SSecond,itledthedevelopm
mentofapossitionpaperb
bytheEducattionConferen
nceBoard(EC
CB),acoalition
eeducationalassociations,ttitledTaxCap
padjustmentsscanhelpschhoolsbalancestudentneed
ds,fiscalstab
bility,and
ttaxpayerconccerns[http://www.nysasbo
o.org/uploads/files/14248813093_NEW
W_ECBtaxcapFeb2015%20
0(1).pdf]
tthatwasissue
edinFebruaryy2015.Thep
paperidentified11action sNewYorkSStatecouldtaketobetterb
balance
improvementtstoeducatio
onandtaxreliefbylookinggattaxcapm
modelsfromo
otherstatesandrulesforN
New
YYorksmunicipalities.
TThe 2015 leggislative session ended with
w
two adju
ustments (seee Appendix A) to the Tax Cap that reflected
p
prioritiesofN
NYSASBOand
dthe Educatio
onConferencceBoardrelaatingtoexclu
udinglocalcaapitalexpend
dituresfor
B
BOCESinstrucctionalspace andcountinggpaymentsinlieuoftaxeesfromtaxexxemptpropertiesinthecalculation
o
oftheallowab
bletaxlevylim
mit.
ImpactofTaxxCapChangestoSchoolD
Districts
FFigure 1 show
ws data on BOCES
B
capitaal expenditures for aid yeear 201415. Five hundreed twelve co
omponent
sschooldistricttsofBOCESincurred$53 millioninaid
dableexpenseeforBOCES instructional space.Thesedistricts
rrepresent 73 percent of districts stattewide. For this expensee, they received $30 million in aid, leaving a
d
differenceofalmost$23m
millioninlocallcapitalexpenseforthiscconstruction.
by the Comm
W
Without the regulations
r
that may be promulgated
p
missioner of Tax and Finaance, we do not know
p
preciselythemannerinwh
hichtheseexxpenseswillaaffectthealloowablelevylimitoftheTaxCap.Howeever,ifwe
aanticipateap
processsimilaartothatusedforschoold
districtcapitaalexpense,w
wewouldexpectdistrictsttobeable
ttoaddtotheiirpermissible
eexclusionforlocalcapitalexpensesannamountequ
ualtototalexxpenseslessaanyaidor
ggrants receive
ed for the co
onstruction le
ess any fund balance or reeserves used
d. The $23 m
million reported by the
SStateEducatio
onDepartme
entforthe20
01415aidyearisanestim
mateofthepotentialbeneefitforNewYYorkState
sschooldistrictts.Theestimatemaybe
elowsincep
presumablythheexclusion wouldbebaasedontotal expenses
aandnotjustaidableexpense.

FFigure1.Aida
ableExpense
e,AidandLoccalCapitalExxpenseforBO
OCESInstructionalSpaces

Aidable Debtt Svc


A
and Capitaal
Outlay Expe
ense
$53,037,47
72

o Debt Svc
Aid on
and Cap
C Outlay
$30
0,086,870

Differen
nce
$22,950,602

SOURCE: NYSED State Aid


d Office data for the
201415 aid year
y
as of Julyy 8, 2015.

FFigure2show
wsrevenuesfrrompaymenttsinlieuoftaaxes(PILOTs) thatschoold
districtsreporrtedreceivinggfor2015
aand2016.Ab
bout70perce
entofNewYo
orkStatescho
ooldistrictsreeportedreceivingrevenueesfromPILOTTs.About
aathirdofscho
ooldistrictssawanincreasseinrevenue
esfromPILOTTsfrom2014to2015andalmost40percentsaw
aanincreasein
nrevenuesfro
omPILOTsfro
om2015to2
2016.Alarggenumberof schooldistrictsalsosawd
decreases
inrevenuesfrromPILOTsfrrom2014to2
2015(37perccent)andfrom
m2015to2016(21percen
nt).
W
Whileitisunknowntheexxactmanner inwhichthe CommissioneerofTaxand
dFinancewilllincorporate PILOTsin
tthequantitycchangefactorrusedtocalculatetheallo
owablelevyli mit,itisexpeectedthatsom
memeasureofgrowth
aassociated with these reve
enues will be
e used. Thus there is a ppotential ben
nefit associated with the ggrowth in
rrevenuesfrom
mPILOTswhicchtotaledapproximately$
$23millionfoor2015and$$13millionfo
or2016.
FFigure

2.

Reve
enues

fro
om

PILOTss

for

New

Yorrk

2015

Totals
T
C
Count
of districts
w
with
PILOTs or
Increase
D
Districts
with No
P
PILOTs
D
Districts
with a
d
decrease
in
P
PILOTs
T
Total
Count

PY PILOTss
Number
Percent
$343,696,687

State

School

Districts

2016

CY
Y PILOT
Ts
Growth in PILOTs
PY PILOT
Ts
CY PILO
OT
Ts
Growth in PILOTs
Numbe
er
Percent
Number
Percent
Number
Perccent
Number
Percent
Number Percent
$324,429
9,608
$336,349,618
$339,293,994
4
$23,430,418
$13,514,,391

467

69%

467

69%

221

33%

477

7
71%

474
4

70%

260

39%

209

31%

209

31%

224

33%

199

2
29%

129
9

19%

277

41%

676

100%

676

100%

247
676

37%
100%

675

10
00%

675
5

100%

139
675

21%
100%

S
SOURCE:
Office of the
t State Comptrollle
er, Tax Cap data, as of Jun
ne 1, 2015.

H
Howdoesthisshelpschooldistricts?Itaallowsthemttoincreasethheirallowableelevylimitstosupportcriticalbasic
eeducationalp
programs.Th
hecapitalexcclusiontothe
eTaxCapiseexpectedtoin
ncreasebyth
heamountoffthelocal
ccapital expenditures for BOCES
B
projeccts. The incrrease in PILO
OTs is expecteed to be refflected in thee quantity
cchange factorr which is multiplied
m
by the prior yeaar tax levy too create a p
prior year levvy that is adjjusted for
p
propertyexpaansion.The adjustedprio
oryeartaxle
evy,asthesttartingpoint fordetermin
ningtheallow
wablelevy
limit,isthenm
multipliedbytheallowable
egrowthfacttor(twoperceentorinflatio
on,whicheverisless)andtheresult
bypermissible
eexclusions,iincludinglocaalcapitalexpeenditures.Th
heimpactiseexpectedtob
begreater
issincreasedb
eespeciallyfor cashstrappe
edschooldisttrictswhichm
mayhaveexhhaustedtheirrfundbalancceandlowpeerforming
sschooldistricttswhichneed
dtoinvestmo
oreineducationalprogram
mstoraisestudentperformance.

C
Conclusion
W
Whilethelegislativeaction
niswelcomeandappearsstoreflectanninterestinm
makingtheTaaxCapwork betterfor
sschools,there
earesometrroublingaspe
ects.First,thechangesdeependontheediscretionoftheCommisssionerof
TTaxandFinan
ncetoimplem
ment.
SSecond,schoo
oldistrictsarefacedwith thepotentiaalofnoincreaaseintheTaxCapfornexxtyear.Due torecent
inflationorCPIdatareleasedbytheU
USBureauof LaborStatisttics,thetaxccapfornextyyearmayallo
owforno
ggrowthinascchooldistricttslevyoverttheprioryear.Thisisespeeciallytroublingforschoo
oldistrictswitthlimited
ffiscal capacityy and substaantial student poverty, which
w
have b een historicaally underfun
nded. Manyy of these
d
districtsareo
onlynowreco
overingfromsixyearsof GEAreductioons,threeyeearsoftaxcaaprestrictionsonlocal
rrevenues,and
dafoundationformulapro
omisedbutneverfullyfunnded.
A
Althoughthessependingad
djustmentsto
othetaxcap
pareindeedhhelpful,theaadjustmentsw
willhavelimiitedorno
p
positiveimpactifthetrend
dtowardsazeroincreaseinthetaxcappcontinues.

AppendixA
2015Le
egislativeActtion

TThesessionco
oncludedwithamendmen
ntstosection
n2023aofthheEducation Lawandsecttion3coftheGeneral
1
M
MunicipalLaw
wrelatingtottheTaxCap .

EEducationLaawsection2
2023awasaamendedto includeapossibleadju
ustmenttothedefinition
noflocal
ccapital expe
enditures to recognize school distrrict local capital expenditures for BOCES instructional
sspace,which
hareapermissibleexclu
usionfromth
heTaxCap:

T
THE COMMISSIONER OF TAXATION AND FINAN
NCE SHALL, AS APPROP
PRIATE, P
PROMULGATE RULES
A
AND REGULA
ATIONS WHICH MAY PROVIDE FOR ADJUSTMEN
NT OF CAPI
ITAL LOCAL
L EXPENDITURES TO
R
REFLECT A SCHOOL DI
ISTRICT'S
SHARE
OF
O
ADDITI
IONAL BUDG
GETED CAPI
ITAL EXPEN
NDITURES
M
MADE BY A BOARD OF COOPERATIVE
C
E EDUCATIO
ONAL SERVIC
CES.

G
GeneralMuniicipalLawsecction3cwas amendedtorecognizegrrowth(quantitychange)o
ontaxexempttland,for
w
whichthesch
hooldistrictorlocalgovern
nmentmaybe
ereceivingpaaymentsinlieeuoftaxes(P
PILOTs).

T
THE COMMISSIONER OF TAXATION AND FINANC
CE SHALL, AS APPROPRIATE,
PROMULGAT
TE RULES
Y CHANGE FACTOR WH
A
AND REGULA
ATIONS REGA
ARDING THE CALCULATI
ION OF THE
E QUANTITY
HICH MAY
A
ADJUST THE CALCULATI
ION BASED ON
O THE DEV
VELOPMENT O
ON TAX EXE
EMPT LAND.