The number of municipalities and districts reporting plans to override New York state’s 2% property tax levy cap has grown since 2022, in some cases, significantly, according to state Comptroller Tom DiNapoli, who called the finding a symptom of slow growth and mounting budget pressures.
The sharpest increase are among cities, with 45% reporting plans to top the limit in the 2026 fiscal year, compared to 13% in 2022, DiNapoli said in a report released Thursday. The number of villages moving to surpass the cap grew to 35.5% from 22.7% during the same time period, and the number towns went up to 28.6% from 16.6%, the report states. Counties registered an even wider increase to 24.6%, up from 3.5%.
“Many local governments are under fiscal pressure, with rising costs and slower growth in recurring revenues,” DiNapoli said in a statement. “For local officials trying to close budget gaps or increase revenue to align with spending, overriding the tax cap is an option, and increasing numbers have reported plans to do so.”
New York’s property tax cap limits levy growth at either 2% or the rate of inflation, whichever is lower, with some exceptions. The cap limit took effect for local governments in the 2012 fiscal year and for school districts in the 2012–2013 fiscal year.
The fiscal pressure extends to fire districts, of which 31.5% planned overrides, up from 18.6% in 2022. The share of school districts, which have been bouyed by increases in government aid in recent years, has more than doubled to nearly 4.9% from 2.4%, according to the findings.
“While school districts certainly face their own fiscal challenges, the 60 percent budget vote approval requirement helps explain why few entertain overriding the tax cap, as meeting that threshold has proven to be difficult,” the report reads.
The rising number of plans to override comes amid evaporating pandemic relief aid, rising inflation and moderating sales tax growth, DiNapoli noted.
Cities across the state are facing daunting budget deficits. Albany recently reported a $55 million deficit over the next 16 months, while Buffalo is confronting a structural deficit of more than $100 million.
“Many local governments are experiencing both slow growth in recurring revenue sources and rising costs,” DiNapoli’s report states. “Entities that used one-time federal relief funds to pay for recurring expenditures may struggle even more to continue supporting the same level of spending. In this environment, it is incumbent on local officials to monitor their fiscal situation closely and be forthcoming with their constituents about the fiscal challenges they face and the tradeoffs that may be necessary to maintain budgetary solvency. Those that do not make the tough choices may find themselves dealing with structural deficits.”