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Even some Town Board members were surprised at the end of September when board member Robert Cree presented calculations that showed the board could reduce the tax rate for the 2012 budget by as much as 44.15% without impacting current programs.  Earlier this month they seemed to be settling on a safer 33% tax rate drop.  This week Caroline Supervisor Don Barber attended a Lansing budget meeting to outline new state regulations governed by the 2% tax cap law.  Lansing officials fear the state mandate will prevent them from lowering the tax rate as much as they are actually willing and able to.

"We're in a very odd situation," said Lansing Supervisor Scott Pinney.  "With the different cuts in expenses we have made over the years, we haven't cut the tax rate enough.  So now we're actually adding a million dollars a year to our fund balance.  We want to spend $700,000 of that and still add $300,000 to the fund balance.  We'll look at it again next year and cut more if we can."

Barber warned that if the Town needs to raise taxes next year it will be limited to the amount mandated by the state.  He said that next year's tax levy amount will be the baseline amount that will be used to calculate the cap on all future taxes municipalities are allowed to collect.  He added that special district fees are included in the state's calculation, even though those fees (sewer, water, lighting district fees) are not technically considered taxes.

"We're trying to be very conservative so that we do it over a number of years," Pinney said.  "And not just make one cut this year and make a mistake, and then have to raise taxes back.  Next year we'll have another cut.  it's looking like it will be a three year plan."

At the September 30th meeting four board members present agreed to think about a 44.15% cut.  When they met again October 7th, some board members were nervous about dropping taxes so steeply, saying that they would prefer a 33% drop this year, and gradual drops over three years to stabilize the fund balance, which has ballooned to $2.324 million, more than twice the amount the board has determined it should normally be.

Taxing authorities can override the tax cap with a supermajority, or 60% of votes.  Earlier this Fall the County Legislature voted to keep the override option open, and it is almost certain they will raise their levy more than 5%.  For the Town Board an override vote would mean 3 of five council members.  Barber recommended passing the override each year to keep the option open, even if the Town doesn't need it.

"The override is a political hot potato," Barber said.  "Especially if you've got a budget like the County's or the Town of ithaca's where they have to have five percent.  That makes it very difficult politically to pass the override, because you're not doing it for altruistic reasons.  you're doing it because you absolutely have to."

Town Bookkeeper Sharon Bowman said the Town would not be able to make the deadline for adopting the override option, saying it would have to be passed in the October 26th board meeting.  Barber agreed with Lansing officials that it wouldn't be worth rushing this year because it is clear the Town will not need the override.  Pinney said the Town would certainly not need to override the cap for the next three years, and probably beyond that time.

"We shouldn't be in that position," he said.

But other board members, including Cree, were concerned that 'what ifs' could impact the need for more taxes down the road.  The 'what if' that most threatens Lansing revenues is the fate of the AES Cayuga power plant, Lansing's largest taxpayer.  A PILOT agreement that was scheduled to lower the valuation of the plant over several years has reportedly been scrapped, and the plant's actual value is of concern due to market factors and the fact that it is up for sale.  County and plant officials are meeting today to discus the plant's value.

Cree said he will have to revisit his calculations to take the cap on the levy into consideration of how much the Town can safely drop the tax rate.  He based his original calculations using a 2% factor for increases in expenditures across the board for each of the next three years.  Bowman asked for a more conservative calculation based on three or four percent rises.

"Historically we budget very conservatively," Bowman said. 

Town officials say they will have new calculations at next Monday's budget meeting that will give them an idea of what kind of cut taxpayers can expect.

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