CPI News: With five months of CPI data, deflation continues, threatening the possibility of no growth in tax levy for 2016-17
The Bureau of Labor Statistics reported June 18, 2015 that on a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers rose 0.4 percent in May after increasing 0.1 percent in April.
For more information see: http://www.bls.gov/news.release/cpi.nr0.htm.
NYSASBO staff track CPI increases for their impact on the allowable growth factor for the Tax Cap and other business management matters. Based on the first five months of the year, inflation is less compared with last year. If the CPI remains low for the rest of 2015, the allowable levy growth allowed in the Tax Cap law which is based on will also be low or zero. (The law does not allow the allowable levy growth factor to be less than zero.)
This poses a problem for school districts in that, despite low inflation, some costs increase, but they will not be able to increase their tax levy for the 2016-17 school year one dollar if they stay within the Tax Cap, which 97 percent of districts did for their 2015-16 budgets. With no growth in local revenues, an increase in State Aid will be critical for schools in 2016-17.
This situation also raises questions about contingent budgets. If no growth is allowed for the Tax Cap, will large numbers of school districts seek overrides? The consequence for a defeated budget is no increase in tax levy, which is the same as a formula that has no inflationary growth. In this case, the tax levy allowed for a contingent budget would be the same as for a district that stayed within its allowable tax levy limit, so there really is nothing to lose by seeking a Tax Cap override.