City Only Municipality To Reach Tax Cap

There is only one municipal entity in the state that has reached its Constitutional taxing limit.

Last month, Thomas DiNapoli, state comptroller, released a report about 20 municipalities close to reaching its Constitutional tax limit, with the report indicating that Jamestown is the only entity hitting its taxing threshold.

The constitutional tax limit is the amount of money a city, village and county can ask its property taxpayers to provide compared to the total assessed property value in the community. Jamestown officials first hit its tax limit in 2017.

According to the state comptroller’s report, the number of cities, counties and villages in New York that are close to reaching its Constitutional tax limit has more than doubled since 2012.

In 2012, only seven municipalities had used 80% or more of its taxing limit. In 2018, that number had risen to 20, with ten municipalities exhausting more than 90% of its tax limit.

“These 20 local governments are in a challenging financial position and have no room for error,” DiNapoli said. “The municipalities in danger of exceeding their Constitutional tax limit must be vigilant about their short- and long-term budgeting. It is critical they take steps to improve their position.”

Report states “the city of Jamestown represents one of the most serious Constitutional tax limit situations statewide.” The report details how starting in 2017, the city had to receive an additional $1 million in state aid to “head off more severe budgetary difficulties.”

New York has two primary mechanisms that limit how much a municipality can raise in property taxes. The property tax cap, which limits year-over-year growth in the levy and can be overridden. The other is the Constitutional tax limit, which maximizes the total amount of real property taxes a local government can raise in a single year and it cannot be overridden.

Cities are more likely than counties or villages to be close to their tax limit. Statewide, of the 60 cities for which 2018 data was available, 10 were found to have exhausted at least 80% of its tax limit, or nearly 17%. Eight of the 527 villages reporting, 1.5%, and two counties out of 57 reporting, 3.5%, were also found to have exhausted at least 80% of its available limit.

The cities of Jamestown, 100%, Yonkers, 92.7%, Lackawanna, 90.9%, Ogdensburg, 89.6%, Fulton, 89.2%, Binghamton, 89.1%, Gloversville, 87.9%, Little Falls, 83.8%, Niagara Falls, 82.4% and Elmira, 80.6%, have all exhausted more than 80% of its taxing limit.

The villages of Herkimer, 99.4%, Hempstead, 96.3%, Monticello, 96%, Ilion, 96%, Ellenville, 92.1%, Spring Valley, 91.4%, Potsdam, 86.6% and Liberty, (83.1% are also among the municipalities that have exhausted more than 80% of their tax limit.

To read the full report, visit osc.state.ny.us/localgov/pubs/research/ctl-implications-for-local-governments.pdf.