A cap on school property tax increases of less than 2 percent will reduce financial flexibility for districts around New York, a report released on Tuesday by Moody's found.
Comptroller Tom DiNapoli announced earlier this month school districts in New York will be limited to a 1.81 percent increase in their overall levy. The cap, in place since 2012, limits property tax hikes at 2 percent or the rate of inflation, whichever is lower.
School districts can override the cap with a 60 percent majority.
"With low voter appetite for tax cap overrides, districts for the most part will continue to adapt to the revenue-raising constraints posed by the property tax growth cap, primarily through expenditure reductions in areas such as programs and staff, rather than tapping reserves," Moody's found in its report. "Stability since introduction of the cap has largely resulted from fiscal discipline and conservative budgeting. Many districts, for instance, have required employees to pay a larger share of the cost of health insurance over the past decade, which has helped slow expense growth. On the revenue side, districts have also benefited from steady increases in state aid."
Gov. Andrew Cuomo today will outline his spending proposal for the new year, including how much state aid schools are set to receive. Generally, Cuomo and the legislature in recent years have approved spending increases for education.
Education funding is typically one of the biggest fights in the budget process.