The new state-imposed 2 percent cap on annual tax increases is at the crux of a dispute between Greenport Village and Southold Town over the town’s payments for fire protection in communities just outside the village.
The cap approved and signed in law last spring limits municipalities, school districts and other special taxing districts from increasing taxes for a given year by more than 2 percent or the rate of inflation — unless 60 percent of a legislative body votes to override it.
The cap has come into play locally regarding the sections of Greenport on either side of the incorporated village, just outside that fire department’s coverage area. Southold Town has contracted with the Greenport FD to provide fire protection and other emergency services for those areas, known as the East-West Fire District.
For the current year, the town has allocated $712,000 to cover its contractual agreement with the village, Supervisor Scott Russell said.
Village treasurer Charlene Kagel said town comptroller John Cushman had informed her that the town would have to renegotiate the East-West contract in light of the 2 percent tax cap. Mr. Cushman couldn’t be reached by presstime.
“I think the mayor understands,” Mr. Russell said, referring to Mayor David Nyce, with whom he discussed the problem.
“Prior to next year, we have to sit down and figure out how to comply with the 2 percent tax cap,” Mr. Russell said.
Greenport Village treasurer Charlene Kagel said she inquired about the situation with the state comptroller’s office, which replied by email that the town is obligated to comply with the contract. The New York Conference of Mayors weighed in similarly on the issue, Ms. Kagel said.
“They have to absorb it,” she said about the town paying the costs. The fire department would have a hole in its budget without the full payment, she said.
At the same time, Ms. Kagel acknowledged that the village will face similar difficulty paying its bills under the 2 percent tax cap.
For example, it’s contractually obligated to pay premiums to the state health insurance program for its employees. But rising rates could make it hard to do that and remain within the tax cap, Ms. Kagel said.
She predicted that the state Legislature will be forced to re-examine the controversial measure, which had many municipalities and school district officials crying foul last spring. More than a few officials said cost increases beyond their control, such as the price of fuel oil, could trip up their best efforts to comply with the cap.
There are exceptions to the tax cap. Rising employee pension costs and some court judgments would not count toward the 2 percent limit.
The legislature also promised mandate relief, an issue of particular importance to school districts beset by state and federal mandates. Many mandates carry no compliance assistance and others are accompanied by only partial funding.
But state Senator Kenneth LaValle has told local officials the committee that’s supposed to be addressing mandate relief has yet to be established.