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NYS Comptroller


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01/09/15, Contact: Press Office (518) 474-4015

DiNapoli Finds Slow Property Tax Growth for Local Governments

Municipalities and school districts face growing challenges to keep pace with increasing costs, according to New York State Comptroller Thomas P. DiNapoli’s 2014 Annual Report on Local Governments. The report found that property tax levy growth has slowed over the past several years, from a peak increase of 7.7 percent in 2003 to a 2 percent increase in the fiscal year ending (FYE) in 2013. Much of this occurred even before the enactment of the 2011 tax cap law, which limits tax levy increases to the lesser of 2 percent or the rate of inflation.

“Local governments are navigating through some choppy waters,” DiNapoli said. “As costs continue to rise, local officials have had to make difficult choices. Although some key economic indicators suggest an improving economy, property tax growth is slow and the pressure remains on local governments to do more with less.”

Local government revenues increased by 1.9 and 1.4 percent in FYE 2012 and 2013, respectively, just keeping pace with inflation, and total local government expenditures were held nearly flat.

DiNapoli’s report notes that many local governments have cut programs and staff, diminished rainy day funds, deferred maintenance and capital purchases or cut public services. For example, between FYE 2009 and 2013, counties reduced health service expenditures by $370 million, cities cut transportation spending by $33.3 million and towns cut refuse collection by $79.3 million.

The number of school districts originally planning to ask taxpayers to override their tax cap in the first year of the new tax freeze law was about the same as in the year prior. However, preliminary analysis of the new tax freeze compliance forms indicates that, in fact, the number of districts who finally did exceed their tax levy limits in school year 2014-15 was actually substantially lower than in school year 2013-14.

Of the 677 school districts subject to the tax freeze credit requirements, 97 percent (658) levied property taxes equal to or less than their respective tax levy limit. The tax freeze credit, which reimburses qualifying homeowners for property tax increases in communities that don’t exceed their tax cap, applies to local governments for fiscal years beginning in 2015 and 2016 and to school districts, again, for school year 2015-16.
DiNapoli’s report also found that total local sales tax collections grew by $739 million, or 5.2 percent from 2012 to 2013, compared to 3.3 percent in 2012 and 5 percent in 2011. Growth in county sales taxes outside New York City was 3.8 percent from 2012 to 2013, with most growth occurring downstate. On average, growth in downstate counties was 5.9 percent, while growth in upstate counties was 1.7 percent. For 2014, the first three quarters saw slower sales tax growth, as downstate disaster recovery spending slowed. 

DiNapoli noted that 2014 marked the second year that the Comptroller’s Fiscal Stress Monitoring System has been in place. The system uses standardized indicators to help recognize fiscal stress problems before they become unmanageable.

As of Sept. 30, 137 local governments and school districts were found to be in some level of fiscal stress. Of these, 14 local governments and 12 school districts have been placed in the significant stress category.

For more detailed information about DiNapoli’s fiscal stress monitoring system and to view reports related to local government fiscal stress visit: Fiscal Stress Monitoring System.

In 2014, the Comptroller’s Division of Local Government and School Accountability:

  • Issued 505 audits of local governments and school districts, including local public authorities such as industrial development agencies (IDAs) and housing authorities;
  •   Reviewed 990 property tax calculations to help local governments and school districts comply with the State’s property tax cap law;
  •     Found more than $788,241 in local government assets that were misappropriated through fraud in 16 communities;
  •   Found nearly $15 million in cost savings or revenue enhancement opportunities; and released reports on a variety of issues such as school district revenue challenges, sales tax collections, local infrastructure spending trends and the performance of IDAs, as well as a series of profiles on several cities across the state.

For a copy of the annual report visit: 2014 Annual Report on Local Governments.


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