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At the last village Board of Trustees work session meeting
Village Clerk Rebecca Molinaro proposed adopting a local law to pierce the New York State Tax Cap just in case it is needed.
The Westhampton Beach Village Board is making plans now in case it must pierce the state’s new tax cap when adopting the municipality’s 2012-13 budget this spring.
At their work session on February 15, board members announced that they will schedule a public hearing at their next meeting on Thursday, March 1. The point of that hearing will be to enact a local law that will allow the municipality to override the 2 percent tax cap—if necessary.
Though a date has not been set yet, the hearing will be held just prior to a public hearing on the village’s proposed spending plan for 2012-13. Village officials have not yet released a figure for next year’s budget.
The new law limits a municipality’s tax levy, capping the amount of money that can be raised through property taxes in any given year by 2 percent or the rate of inflation—whichever is lower. Municipalities who want to override the cap must first enact a local law.
Westhampton Beach Village Clerk Rebecca Molinaro, who is putting together the initial budget documents for board review, said Albany is advising municipalities to adopt a local law to pierce the cap even if they produce a budget that comes in under that cap.
“The reason being is they have, unfortunately, admitted that they will not be able to verify that municipalities are complying with the law the first year,” Ms. Molinaro explained in a presentation to the board last week.
If a municipality inadvertently over-collects its levy in a given year and is audited, it must reduce the tax levy in the next fiscal year by the amount it over-collected, thereby reducing the revenues that can be collected to balance the budget. Ms. Molinaro described the state’s inability to verify that governments and school districts are staying within the cap as “a little unnerving.”
For the current fiscal year, the board is working within a budget of $9.3 million, and the current tax levy is $7.75 million—an increase of almost 5.7 percent over the previous year. The board intends to hold its work session on its 2012-13 budget on Wednesday, March 21. By law, the village must adopt its spending plan before May 1.
“It’s in the village’s best interest to adopt a local law even though, as far as I know, we have every intention of adopting a budget that complies with the tax cap,” Ms. Molinaro said.
Village Attorney Richard Haefeli said while a local law that overrides the cap could be challenged in court, that scenario is not likely to happen.
While the cap allows local governments to calculate some exemptions into the budget, a move that legally puts them over the 2 percent levy, Ms. Molinaro is concerned that some inaccuracies might occur when calculating them. She explained that she’s concerned that if a mistake is made, and no one in Albany is double-checking the information this year, the village could later be punished for the error.
“The local law to override the cap will only ensure that if we mistakenly exceed it, at least we complied with the law,” Ms. Molinaro said. “It does not necessarily safeguard us, since the end result is the same. A municipality will have to recoup the monies by lowering the tax levy in the subsequent fiscal year by the amount that was over-collected.”
Village Board member Hank Tucker agreed that putting a local law on the books to pierce the cap was a good idea.
“We have to,” he said. “If we don’t do it then, we can’t override it and we’ll have bigger problems.”
