Comptroller: Counties, towns to see 2% tax cap as inflation slows
Inflation has slowed over the last year, but area counties and towns will again be hit by the property tax cap.
The Office of the State Comptroller reported that local governments with calendar-based fiscal years will see property taxes capped at 2% again when they prepare budgets later this year.
“Allowable tax levy growth will be limited to 2% for a fourth consecutive year,” Comptroller Tom DiNapoli said. “The rate of inflation has decreased since the highs of 2022, but local governments are still facing higher prices for goods and services, moderating sales tax revenue collections, and an end to federal pandemic aid. Local officials should consider these issues as they budget for the coming year.”
In accordance with state law, DiNapoli’s office calculated the 2025 inflation factor at 3.30% for those local governments with a calendar fiscal year, above the 2% allowable levy increase, and indicative of the higher costs facing these localities.
The cap went into effect in 2012, and generally limits tax levy increases to either 2% or the rate of inflation, whichever is lower. In addition to certain exceptions in spending against the cap, municipalities may override the tax cap by drafting a local law. Despite the chance of political repercussions for elected officials from voters, there are no financial penalties from the state for overriding the tax cap.
Cattaraugus and Allegany counties — like other counties in the state — operate on a calendar-based fiscal year, as do all towns in the state. While some villages use a calendar fiscal year, most area villages do not, nor do any local school districts.
The OSC reports tax levy cap increases multiple times a year to inform local governments with non-calendar fiscal years of caps and inflation rates.
This marks the fourth straight year of a 2% cap for towns and counties, according to the OSC. The cap in 2021 was 1.56%, matching the rate of inflation at that time. The annual inflation factor peaked at 8.06% for municipalities starting their budget years June 1, 2023, which included the city of Olean, but municipalities were held to the cap without passing override legislation.
In 2023 and early 2024, several area municipalities overrode tax caps, which took the form of local laws. The village of Franklinville and the city of Olean overrode tax caps for the first time, while the town of Allegany has done so for two consecutive years.
The 2025 rate for the city of Olean, which begins its fiscal year June 1, will be announced in November. Rates for schools, with July 1, 2025 fiscal year start dates, will come in December.
