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School board adopts budget, utility tax

After adopting a tax cap compliant budget of $79.3 million for the 2014-2015 budget year, the Rye City school board will rely on a utility tax to fund a portion of the budget’s $3.6 million shortfall.

On Tuesday night, the Board of Education adopted the budget following a unanimous 7-0 vote of the board.

The 2014-2015 budget includes a 3.40 percent spending increase over last year’s budget, as well as a tax levy increase of 1.64 percent, which falls at the allowable tax levy limit. The budget’s 1.08 percent tax rate increase equates to a $172 annual increase for the average Rye homeowner, according to Assistant Superintendent for Business Gabriella O’Connor.

The budget adoption follows a month-long debate over two possible budget scenarios that addressed the shortfall: a tax cap compliant budget or non-tax cap compliant budget.

A tax cap compliant budget would draw revenue from reserves along with a utility tax that the district would impose on Rye City residents. The school board has not yet adopted a resolution authorizing the utility tax, but will vote on the matter following the May budget referendum.

A utility tax applies to things like gas and electric services, refrigeration, water, heat and communication services like land line phones. Cell phones may also be taxed, but not cell phones with pre-paid plans.

O’Connor estimates the school district could collect a bit more than $1 million annually from a utility tax, with the 2014-2015 prorated revenue estimated at $913,250 based on information provided to her by the city.

Rye City collects $400,000 annually in utility taxes.

The non-tax cap compliant budget option the board considered would require a tax cap override by the board and a 60 percent approval rate in the May 20 public vote.

Discussing the board’s decision to approve a tax cap compliant budget, Board of Education president Laura Slack said she believes it was necessary for the board to do everything possible, including imposing a utility tax, before choosing an override.

“I think the issue with the override is that, before we can go to the taxpayer and ask for an override, it’s important we do everything else that we can,” Slack said.

While the majority of the board expressed its support for a utility tax, Board of Education member Ed Fox made it clear in recent weeks he believes a tax cap override would be the better option for the district to choose in order to make up the missing revenue.

“Raising property taxes is the tax efficient solution to raising the additional revenue needed. I’m not happy about this and think the board made a mistake not going for an override,” Fox said. “They put themselves in the position where they have no out going forward. If we asked the public for an override and failed, we at least had the utility tax to fall back on.”

During the April 22 Board of Education meeting, Fox tried to make an amendment to the budget resolution which would include a 2.3 percent tax cap override, but he did not receive any support from the board to push the amendment through. Fox said he ultimately voted in favor of the tax cap compliant budget because he knew the other board members would approve it anyway.

While Fox may be disappointed in the board’s decision to forgo the tax cap override this year, he said it was a “small victory” that the conversation about the reality of an override happening in the near future has begun.

“I feel that we’ve made some headway,” he said, “but my fear is you’re looking at such a large override in the future—5, 6, 7 percent—that the public just won’t swallow it.”

Slack said an override is possible in coming years if the state continues to deliver exorbitant demands for retirement payouts and decreasing state aid.

In terms of cutting expenditures, like eliminating staff positions and programs, Slack said that was not a possibility this year, especially in light of the district’s growing enrollment and past years’ efficiencies.

“We think we are, at this point, tapped out. We can’t make those kind of cuts any more,” she said.

If the Rye school district was to impose a utility tax after the May 20 public vote, they would join four other small-city districts that have already implemented the tax: New Rochelle, White Plains, Peekskill and Mount Vernon.RYE-CHART

CONTACT: katie@hometwn.com