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Village Approves Tax Cap Override Option

Mineola officials: ‘It’s just a tool, not a requirement’

To say it’s going to be easy for municipalities and school districts to make a 2 percent tax cap would be misleading. Tough decisions are on the horizon; some residents will be in uproar and others will applaud those involved for fiscal responsibility.

The Board of Trustees of Mineola approved the amendment of a local law, which authorizes the village to set the property tax levy in excess of the limit established by New York State. The board and village attorney John Spellman stated that this does not mean the board will intentionally go over the cap because of the approved override.

However, the governing body wanted the option available so the village does not end up painted into a corner when it comes time to put together a budget in early 2012. If a village, without the override, goes over the cap, that village would incur heavy fines.

The tax cap limits the increase in property taxes each year for school districts and local municipalities to 2 percent, or the rate of inflation. If a community chooses to increase taxes more than the tax cap allows, a 60 percent vote in a school budget vote or a 60 percent vote by a local legislative body can override it. New York City is exempt from the tax cap.

This law is a year-to-year override. A local municipality would need to enact it each year to have the ability to exercise it.

Mineola approved a tax increase last year at 3.5 percent on an operating budget of approximately $18.5 million. Mayor Scott Strauss wanted to reassure that the village would do everything to make the cap.

“I want to be honest with you here, we’re not looking to raise the tax limit, you know, pass this and come out with a huge tax increase next year or in future years,” Strauss said. “As we’ve done this past year, and the board and administrations prior to this one, is to get the lowest tax possible. We’re residents here too. We pay taxes here and we don’t want to pay any more taxes than we want or the village wants to. The idea of this tax law is to allow us flexibility should we need to go over the cap.”

Strauss stressed costs the village can’t control like pension contributions; state imposed mandates and health insurance premium increases do not make it easy on any village. John Spellman stated that most if not all villages would override the cap.

“We recommend as a precautionary measure, as the board goes into the budget season, that it give itself the tool, to act responsibly in the face of the numbers that are presented to the board,” Spellman said. “The law itself provides that you can comply with it by overriding it and that’s what we’re recommending the village does. Virtually all the villages in Nassau County are going to override it. This is a tool, not a required use.”

So this begs the question, “Why enact a tax cap if a municipality or school district can just override it with a vote every year?” Resident Jessie Smith wondered.

“I hope I didn’t give the impression that this is a lousy law,” Spellman said. “I think everyone agrees with the intent of the law to give everyone a heightened sense of careful administration of public tax dollars and to keep taxes as low as possible. The law itself recognizes that it’s not absolute because it gives the override provision.

“Each individual municipality has to customize its approach to this goal based on its own economic needs and demands,” he said. “The difficulty is that we’d be too far in the budget process to enact this override if we didn’t do it in advance for precautionary reasons.”

The village labor contract is also expiring, which could create more issues near budget season. Furthermore, the formulas and calculations dictated by the state are “a bit convoluted” and the village needs to be aware of the fines incurred if Mineola pierces the cap, according to Strauss.

“How do we pay those hefty fines?” “It’s a bad situation that we’d have to face if so,” Strauss stated.

Trustee Larry Werther, who has opposed the cap from its infancy, said the law needs to be enacted to avoid financial and punitive damages. “If we pierce the cap without enacting this, it would cause the taxes to go up even more. [The tax cap] was an ill-conceived law. It was put in to effect without any meaningful mandate relief.”

“We’re going to work very hard to stay within the cap,” Deputy Mayor Paul Pereira said. “This gives us flexibility in March and April when we have to approve a budget.”