Amid Inflation Woes, Council Explores Overriding Tax Cap As Precaution
Published: September 23rd, 2022
By: Sarah Genter

Amid inflation woes, council explores overriding tax cap as precaution The City of Norwich Common Council at the August 30 joint committees meeting. On Tuesday, September 20, council members discussed proposed local law no. (D), which would allow the city to exceed the two percent tax cap set by New York State. (Photo by Sarah Genter)

NORWICH — City of Norwich Common Council members were split during Tuesday's meeting on whether to move forward with proposed local law no. (D), which would override the tax levy limit in the City of Norwich.

City of Norwich Director of Finance Dee DuFour said city tax rates are allowed a two percent increase, as set by the state. However, according to the Office of the New York State Comptroller, local governments have the right to override and increase the tax levy, or amount of property taxes billed to residents.

Due to high inflation and the deadline for budget preparation drawing closer, the council is exploring the option of exceeding that cap, should the final budget show a greater than two percent increase in taxes.

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"There's a whole calculation that you do from the comptroller’s office based on what your actual budget is," explained DuFour. "Once we get our budget prepared there’s a tax cap form we have to fill out. So when we go in there we fill out that form, that whole calculation, and that will give us, basically when we put that information in, whether we meet that tax cap formulation or not."

The common council discussed the issue at Tuesday's meeting, and ultimately voted to set a public hearing, which would allow city residents to give their input on the matter.

The public hearing is set for 6:30 p.m. on Tuesday, October 18. City residents will be given the opportunity to address the common council and voice their thoughts on overriding the tax cap. The council will hold a final vote on the proposed local law at a later date.

Council members were split on the matter, with some arguing that setting a public hearing doesn't mean they have to adopt the law, but it would allow residents to weigh in. Others felt there were options available beyond raising taxes in the event the 2023 budget goes over the tax cap.

"I understand that this is part of the process in the event that we do, in fact, exceed the tax cap while preparing our budget for 2023. But with that being said, we are fiscally healthy as a city, we have plenty of funds in the fund balance," said Alderman Robert Jeffrey. "We’re experiencing high inflation, we’re experiencing high costs of energy, and there’s a lot of people that I would imagine in the city would like to have a break."

Alderman William Loomis agreed, citing the risk of property owners losing STAR rebates if they exceed the tax cap. City of Norwich Mayor Brian Doliver estimated that would impact around 80 percent of city residents.

However, even if the council votes to override the tax cap, the 2023 budget still has the potential to come in at or under the two percent limit. In that case, property owners wouldn't lose eligibility for STAR rebates, and taxes would not increase by more than two percent.

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"Without all the figures in front of us as far as how many people are affected, and how much money that would make a difference in the budget, I feel that it would make sense to move on and have the hearing," said Alderwoman Nancy Allaire. "Then once we get more facts by the next meeting we’ll have a chance to make a better educated decision."

DuFour stressed that the city is not seeking out higher tax rates, but rather considering this option as a precaution. Implementing a local law is an approximate two-month process, said DuFour, which wouldn't leave enough time to adopt it after the budget is completed.

"We don’t know at this point in time if we would need to do that. But in order to pass a local law, it takes at least two months to do that, and by the time we have the budget prepared we wouldn’t have enough time to do that," DuFour said. "With the inflation and the way that it is and with it only being a two percent tax cap, there would be a possibility that we might have to go over that two percent, and that’s the only reason it would be a possibility."

"We’re just kind of covering our bases," she added.