1. NYS Property Tax Cap As Enacted by State Senate Assembly and Governor's Office, 2011

2. What is the Tax Cap Ch. 97 of the Laws of 2011 –Enacted June 24, 2011 –Imposes tax levy limit beginning with FY2012 –In effect until June 15, 2016 at minimum Tied to NYC rent control –Note:The law does not place limits on assessed values or tax rates. –Adds Section 2023-a to Education Law amending provisions related to budget adoption

3. Definition of Property Tax A local tax imposed on real property for the purpose of financially supporting local governments and public schools. Real property (commonly known as "real estate") is land and any permanent structures on it. Does not include user fees or Payments in Lieu of Taxes (PILOT)

4. Basic Rule of Tax Levy Limit Board of Education cannot adopt a budget that exceeds the prior year tax levy by greater than 2% or the Rate of Inflation, whichever is less. However, there are certain factors that are excluded from the limit.

5. Tax Levy Limit Implications Total levy requiring simple majority to support proposed budget Tax Levy Limit + Coming school year exemptions = Maximum Allowable Tax Levy

6. Tax Levy Limit Calculation Factors Adjustments to Base Levy Limit –Tax Base Growth Factor –Pilot Payments –Carryover Limit from Prior Year Exclusions for Budget Year Levy Limit –Court orders/Torts –ERS/TRS –Capital Tax Levy

7. Tax Levy Limit Prior year tax levy X Tax base growth factor, if any + Payments in lieu of taxes (PILOTs) receivable during base year - Taxes levied for exemptions during prior year (not ERS & TRS) = Adjusted Prior Year Tax Levy X Allowable levy growth factor (lesser of 2% or CPI) - PILOTS receivable during budget year + Available carryover, if any = “Tax Levy Limit” (before exclusions)

8. Tax Base Growth Factor Provided by the NYS Department of Taxation and Finance Based on economic growth –Adjusts the levy limit for new growth or increases in property values, not decreases in full value

9. Code Chautauqua County DistrictsTax Base Growth Factor 64603Forestville1.009600 63001Pine Valley1.009600 66201Ripley1.008300 63201Clymer1.007500 62401Frewsburg1.006700 64601Silver Creek1.004700 67201Westfield1.003900 63801Falconer1.003400 66601Sherman1.003200 63601Bemus Point1.002900 65801Fredonia1.002900 60300Dunkirk1.002800 47601Randolph1.002800 66001Brocton1.002500 60800Jamestown1.001300 62803Chautauqua Lake1.001200 64801Panama1.000800 62201Southwestern1.000500 62601Cassadaga Valley1.000000 47201Gowanda1.000000 Average 1.003730

10. PILOT Payments PILOT adjustments are first added into the 2011-2012 base levy PILOT adjustments are then deducted out of 2012-2013 budget year levy

11. Levy Limit Add-Ons and Exclusions NYS and Local Retirement System (ERS) and Teacher’s Retirement System (TRS) employer contributions Court Order/Tort action judgment expenditures greater than 5% in prior fiscal year Capital tax levy –Necessary to support local capital expenditures

12. ERS/TRS Employer Contributions Some pension cost increases may be excludable from levy limit if the District’s pension contribution rate increase exceeds 2%. ERS Exclusion FactorTRS Exclusion Factor 2011-2012 ERS Rate16.30%2011-2012 TRS Rate11.11% 2012-2013 ERS Rate18.90%2012-2013 TRS Rate12.50% Difference2.60%Difference1.39% State Set ERS Rate Limit2.00%State Set TRS Rate Limit2.00% Excludable ERS Rate0.60%Excludable TRS Rate-0.61%

13. ERS Salaries Used for Calculation Salary projection provided by NYS –Uses April 1, 2010 – March 31, 2011 actual reported salaries –Projects two years forward using actuarial data Example: –$100,000 base salary projected two years at rate of 1% set by the State –1 st year is $101,000 ($100,000 x 1%) –2 nd year is $102,010 ($101,000 x 1%) –The projected increase over two years would be $2,010 or 2.01%

14. TRS Salaries Used for Calculation The District projects TRS reportable salaries for base year 2011-2012 The calculated excludable factor rate for TRS is -0.61%. Therefore, this pension cost is not an eligible levy limit exclusion item for the 2012-2013 tax levy calculation

15. Capital Tax Levy Applicable only for school districts and not for municipalities or fire districts Guidance is still forthcoming from the State…there is much speculation on what are allowable expenses and how the “net of aid” calculations will be performed

16. Capital Tax Levy (Con’t.) Budgeted expenditures for financing, design, construction, furnishing, equipping, or otherwise providing for school district capital facilities and equipment Expecting guidance from State Education Department on what “capital expenditures” clearly means –Anticipate the guidance to encompass items treated as capital assets for accounting purposes

17. Capital Tax Levy (Con’t.) Expenditures anticipated to be included in calculations: –Cost of direct purchase of capital assets (land, buildings, vehicles, some equipment, etc.) –Costs for new construction, reconstruction, and renovation of facilities Design costs, architect and engineering fees, furnishings, equipment, financing, or “otherwise providing” for capital facilities

18. Calculating Capital Portion of Levy Limit Capital Calculations2011-20122012-2013 Expenditures Debt Service$1,484,032$1,464,155 Bus Purchase less Reserve Funding267,598183,275 Equipment & Leases0.00 Total Expenditures$1,751,630$1,647,430 Revenues Building Aid$1,527,775$1,475,038 Transportation Aid (Ratio at 0.90)240,838164,948 Total Revenues$1,768,613$1,639,986 Total Capital Costs Net of Aid (Expenditures less Revenues) (16,983) 7,444

19. Tax Levy Limit Prior year tax levy X Tax base growth factor, if any + Payments in lieu of taxes (PILOTs) receivable during base year - Taxes levied for exemptions during prior year (not ERS & TRS) = Adjusted Prior Year Tax Levy X Allowable levy growth factor (lesser of 2% or CPI) - PILOTS receivable during budget year + Available carryover, if any = “Tax Levy Limit” (before exclusions)

20. Summary of Levy Limit Levy Amount Dollar Increase Percent Increase 2011-2012 Tax Levy$5,404,754 2% Increase$5,512,849$108,0952% Levy Limit Without Exclusions$5,556,233$151,4792.80% Levy Limit With Exclusions$5,574,801$170,0473.15%

21. Overrides Local governments may override the tax cap limit by resolution or local law adopted by 60% School districts may override the limit by the adoption of the budget by no less than 60% of votes cast –A Simple majority is needed to pass the budget for a levy at or below the levy limit

22. Levy Reserve and Carryover Levy in excess of levy limits must be placed in a Tax Levy Reserve Carryover –Allows districts to carryover up to 1.5% of levy limit and only by the amount that the base year was below the levy limit –Since 2012-2013 is the first year of implementation, this is not applicable

23. Tax Levy Limit Important Dates February 15 th –Tax base growth factor provided by NYS Department of Taxation and Finance March 1 st –District submits to NYS Comptroller tax limitation plus exclusions and intent regarding override option 45 days before legal notice –District will have to specify whether it will seek vote to exceed levy limit May 15 –Vote on budget levy and BOE elections

24. Sources Erie 1 BOCES Finance and Legislative Services New York State Office of the State Comptroller New York State Office of Real Property Services Questar III BOCES State Aid and Financial Planning Services And from presentations provided by: Harris Beach PLLC, Mr. Patrick Malgieri & Ms. Tracie Lopardi Hodgson Russ LLP, Mr. Jeffrey Swiatek Municipal Solutions, Mr. Jeffrey Smith Statewide School Finance Consortium, Dr. Richard Timbs