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What are the effects of the tax cap?

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CNY/NNY/S. Tier: What are the effects of the tax cap?
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In this tough economy, nobody wants their taxes to go up. But it's all part of the equation when local governments are putting their budgets together. Our Barry Wygel takes a look at what the property tax cap has done to help or hurt local governments.

NEW YORK STATE -- It was heralded as a major reform for New York. The two percent property tax cap would help residents in the most taxed state in the nation, but there are many misconceptions.

"It's not a straight two percent cap. There are other pieces in the legislation that allow for some differences and also, the tax cap can be overridden," said Assemblywoman Addie Russell.

And in many places, it has been. St. Lawrence County recently passed a budget that had a 13 percent increase, well over the 4.5 percent they were allowed in the tax cap.

"In the last four years, we have cut this operation to the bone. There's very little left in here that you can find to cut," said Karen St. Hilaire, St. Lawrence County Administrator.

If a municipality proposes a budget that goes over the tax cap, a vote must be held in which 60 percent of legislators must approve the override. The Ogdensburg City Manager says it's a good idea to hold that vote, even if you plan on keeping tax rates below the limit, just in case.

"We voted to get the capability to override. I think that's a wise decision regardless of where you stand budget wise," said John Pinkerton, Ogdensburg City Manager.

Whether or not the tax cap is actually affecting the way local governments make their budget decisions, it can't be denied that they are never easy decisions.

"I think our local boards are really taking extra pains when it comes to these types of issues. We're in a very difficult time economically," said Russell.

Local governments say that in order to get their tax levy down within the tax cap, they're going to need some help from the state, something that so far hasn't been that forthcoming.

“In St. Lawrence County we are not going to be able to live with the tax cap until we get some additional revenue in here," said St. Hilaire.

That could come in the form of a sales tax increase or mandate relief. Local governments say the state has passed the buck down to them. Legislators say they are working to identify where they can help.

"As legislators, really dive into what's going to help our communities the most, and work on that type of mandate relief at least in the near future," said Russell.

Changes in state legislation or mandate relief will drastically change how to the tax cap is used on the local level and maybe will allow more governments to stay under the cap.

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