BUFFALO, N.Y. (WKBW) — Buffalo's Common Council is considering a move to exceed the state-mandated property tax levy cap for the upcoming fiscal year.
This proposal would allow the city to increase its property tax levy beyond the usual 2% limit set by New York State.
Under the state's tax cap law, municipalities are generally restricted to increasing their property tax levy by 2% or the rate of inflation, whichever is lower each year.
Ken Girardin, a research director for the Empire Center for Public Policy, said local governments can override the property tax levy cap, but it's rare.
"The property tax cap is designed to keep the cost of government from going up faster than the cost of everything else, so it limits the growth of the levy, which is the total amount of property taxes collected at 2% or the rate of inflation, whichever is lower. And there have been some periods where we've had inflation lower than 2% and the caps have been lower than that, towns, counties, cities, they will override the tax cap. From time to time, it's been fairly rare. We had an uptick in it last year, as you add inflation starting to pinch local government budgets," he said.
In Buffalo's case, the proposal to exceed the cap comes as a response to the city's ongoing budget deficit, about roughly $40 million, and inflationary pressures that have outpaced the growth of city revenues in recent years.
In the proposal, some Common Council members justify the need to override the tax levy limit due to a combination of factors that have strained Buffalo's finances:
- Inflation: Over the past decade, inflation has risen by approximately 32%, significantly outpacing revenue growth.
- COVID-19 Impact: While federal aid through the American Rescue Plan helped buffer the financial impacts of the pandemic, these funds will soon be exhausted.
- Revenue Shortfall: For years, the city has kept its tax levy largely unchanged, even seeing a decrease between 2009 and 2018. The city argues that this fiscal prudence has resulted in a situation where the cost of providing services has outpaced revenue growth at a 2:1 ratio.
You can read the proposal below.
Common Council member Mitch Nowakowski said city expenses far exceed revenue, making it necessary to balance the budget.
"So I'd rather be responsible now, go over the cap a certain extent, moderately, so that we don't have to face, you know, a significant, steeper tax increase if we keep delaying this honestly," he said.
I asked him how he responds to pushback from people who say this is because of the City of Buffalo's financial mismanagement.
"It's a fair criticism, even in the local law. You know, it's something that Mayor Brown has stated that by holding the tax is so low that he was able to keep over $300 million in taxpayers' accounts. My always counterbalance to that is that could be true, but it always comes off as a cost, and that not raising taxes for such a significant amount of time is what led us here," he responded. "And I think that the worst people should keep an eye on is we have to make hard decisions now so that we can avoid a hard control board. And if a control board was to go hard, that means that we won't have the ability to determine what the tax rate is, what contracts are frozen, what city workers will see a hiring freeze. So right now, we have to do this now to really make sure that we can get our finances in line. And it starts now."
To legally exceed the 2% tax cap, Buffalo's Common Council must approve the proposal with a 60% majority vote.
If approved, the city would be able to adopt a budget for the fiscal year starting July 1, 2025, that includes a higher property tax levy than the cap would normally allow.
Nowakowski said the Council will review the proposal on Tuesday, with discussions continuing for weeks and a public hearing for resident input.
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