Katulak: Two Percent Tax Cap Explanation

This year the will be starting our budget process earlier than ever, due to the increased challenges being placed upon us by the two percent budget cap, decreasing state aid revenue, and increasing expenses. Although we have been extremely conservative in our spending, we still have a school district to operate so we cannot cut all expenses. We are a human resource organization that services children.

In an effort to help our community to understand the budget process, we will be explaining various components of the budget and how the two percent tax cap will influence our district this coming year and the implications regarding personnel and programs. Michael Frank, the Assistant Superintendent for Business, and I will help you to understand all of the new complexities related to this year’s budget development.

The first explanation we want to explore is what the two percent tax cap is and the relationship it will have on your taxes. We have put together the following as a concise summary for you.

The two percent tax cap for the 2012-2013 school year pertains to the total amount the district is allowed to collect (or levy) from the community. Contrary to what many believe, this does not mean that a taxpayer’s bill is limited to a two percent increase. It is possible, and will likely happen, that some individual tax bills will go up by more than the two percent, some will go up by less than the two percent and some will be at the average increase. It is even possible for someone’s tax bill to go down. The reason this happens is because the tax levy is divided amongst residents by assessed values (set by Nassau County) within the community.

Let’s use an example and assume that there are only four houses in the school district and there are no exemptions for any of the taxpayers. Let’s also assume that each home has an equal assessment of 1,000. Finally, let’s assume that the total tax levy for the community is $10,000. Each taxpayer will pay the same amount of taxes for the year since each taxpayer’s assessed value is ¼ of the total assessed value for the community.