“In 2011, after years of trying to rein in out-of-control property taxes — Govs. George Pataki, Eliot Spitzer and David A. Paterson all tried — we passed the first local property tax cap. The 2 percent property tax cap changed long-term trends and saved New Yorkers billions.”
-Former Gov. Andrew Cuomo
Property tax levy growth will be capped at 2% for 2024 for local governments that operate on a calendar-based fiscal year, according to data released by State Comptroller Thomas P. DiNapoli. This figure affects tax cap calculations for all counties, towns and fire districts, as well as 44 cities and 13 villages.
“Allowable tax levy growth will be limited to 2% for a third consecutive year,” DiNapoli said. “Although the rate of inflation has begun to decrease, it still poses a challenge for local governments and their budgets. As local governments spend down their one-time federal pandemic assistance, officials will need to carefully develop and balance their budgets for the coming year.”
In accordance with state law, DiNapoli’s office calculated the 2024 inflation factor at 6.26% for those local governments with a calendar fiscal year, well above the 2% allowable levy increase, and indicative of the higher costs facing these localities.
The tax cap, which first applied to local governments and school districts in 2012, limits annual tax levy increases to the lesser of the rate of inflation or 2% with certain exceptions including a provision that allows municipalities to override the tax cap.
On July 6, DiNapoli announced that the New York State Common Retirement Fund’s (Fund) investment return was -4.14% for the state fiscal year that ended March 31, 2023. The Fund closed the year valued at $248.5 billion.
“Recent months have been trying for investors, but thanks to the state pension fund’s diverse investments, members, retirees and beneficiaries can rest assured their pensions are secure,” DiNapoli said. “There is no doubt that challenges lie ahead, with concerns over a recession and potential interest rate increases, but the state pension fund is well positioned to weather these storms.”
The Fund’s long-term expected rate of return is 5.9%. The last time the NYS Pension Fund lost money was in 2020, 2.6%. Other times over the past twenty years that the fund has lost money was in 2009-26%, and 2003-10%.
Local governments and school districts will now have to make up the difference in the costs to fund the pensions of civil servants, teachers and fire and police officers. This will make it difficult for both to stay under the tax cap when they present their 2024 budgets later this year.
