Property tax increases will be limited to a 1.56 percent increase for local governments in New York amid a pandemic-induced cash crunch, Comptroller Tom DiNapoli on Tuesday said.
The cap limits property tax levy increases to 2 percent or the rate of inflation, whichever is lower. There are narrow exemptions for some growth and local governments can override it.
Local governments are facing limited revenue options amid a pandemic that has ground the economy to a virtual halt for much of the year so far, freezing sales tax revenue and potentially slashing state aid by up to 20 percent.
“The pandemic and the fiscal uncertainties municipalities are facing add to the challenge of adhering to the tax cap,” DiNapoli said. “At the same time the levy growth rate is dropping, both revenues and spending could deviate significantly from what was planned. Local governments must closely monitor their budgets to ensure they are balanced and that they have cash on hand.”
Some county governments receive most of their annual budget revenue from sales taxes, keeping pressure off property owners. That may not be the case this year as that money has largely evaporated.
The lack of revenue could lead to service cuts, reductions in overall spending or tax hikes in order to make ends meet.