“Allowable tax levy growth will be limited to 2% for a third time in four years for local governments with calendar fiscal years,” DiNapoli said. “As the economy recovers from the pandemic, local governments have seen some revenues rebound and have benefited from one-time federal financial assistance. At the same time, the risk of inflationary cost increases and the need for investments that will stimulate economic growth and fund essential services may lead to challenging budget decisions ahead.”

The tax cap, which first applied to local governments and school districts in 2012, limits annual tax levy increases to the lesser of the rate of inflation or 2% with certain exceptions, including a provision that allows municipalities to override the tax cap.

The 2% cap for the 2022 fiscal year is the third time since 2019 that municipalities with a calendar year fiscal year (Jan. 1 through Dec. 31) had their levy growth capped at that amount. In 2021, the allowable levy growth was 1.56%.

The Office of the State Comptroller has created a financial toolkit containing resources that can be useful to local officials in the wake of COVID-19 pandemic.

Chart
Allowable Tax Levy Growth Factors for Local Governments