State Comptroller Thomas P. DiNapoli announced the school tax increase...

State Comptroller Thomas P. DiNapoli announced the school tax increase cap for 2025-26 on Wednesday. Credit: Jeff Bachner

Growth in school property taxes on Long Island and statewide will be capped at a maximum 2% for the fourth year in a row, state Comptroller Thomas DiNapoli announced Wednesday. 

The latest cap restrictions will apply to school district revenues during the 2025-26 fiscal year, which begins July 1. 

The 2% figure is a statewide baseline. Actual tax increases in individual school districts can run somewhat higher or lower, depending on local financial circumstances. For example, voter approval of a construction bond issue in a district can result in costs exempt from the cap. 

In Nassau and Suffolk counties, as in many areas, school taxation accounts for more than 60% of homeowners' property tax bills. Total taxation for the current 2024-25 school year is more than $9.5 billion in the region's 124 school districts. 

Under the state's cap law, annual tax hikes for school districts and municipalities are limited to 2% or the inflation rate, whichever is lower. Recent inflation rates, while moderating, have generally run above the cap. The latest inflation figure, posted for December by the U.S. Bureau of Labor Statistics, was 2.9%.

"School district and municipal officials will have to deliver services efficiently as they face the difficult task of managing costs that continue to rise," DiNapoli said in a statement issued Wednesday. 

Limits on tax hikes

Since 2012, when the state's cap first took effect, there has been a substantial drop in district tax increases, which previously averaged 6% in many years. But Bob Vecchio, executive director of the Nassau-Suffolk School Boards Association, argued that a recent rise in inflation has left many districts squeezed between higher costs and tighter restrictions on tax revenues. 

"The problem is that the rate of inflation is higher than the tax cap, which leaves a gap for districts to deal with," said Vecchio. "Unless the state makes up the difference, districts will have to make some choices in the coming budget season." 

State aid to schools rose by record sums between 2021-22 and 2023-24, to a total of more than $34 billion statewide. Those increases were part of a three-year effort to narrow the financial gap between rich and poor districts. The drive lost some momentum in 2024-25, but statewide aid for the year still grew by $1.3 billion statewide. 

The financial picture for districts in 2025-26 could become clearer on Tuesday, when Gov. Kathy Hochul issues her annual budget proposal, including a package of state funding for public schools. Vecchio said he was "cautiously optimistic" about the coming state-aid proposal. 

A leading taxpayer advocate, Andrea Vecchio of East Islip, told Newsday on Wednesday that the state's cap system, while imperfect, had made an impact on school taxation and spending during the 13 years of its existence. Andrea Vecchio is a founding member of Long Islanders for Educational Reform, a regional advocacy group, and is no relation to Bob Vecchio of the school boards association. 

"Caps have helped make people aware that there are limits," Andrea Vecchio said in a phone interview. "But I think it would work better if districts didn't game the system all the time by padding their budgets."

A Newsday analysis published last month found that a total of 83 districts statewide, including 12 on the Island, had been flagged over the past five years by the comptroller's office for stockpiling millions of dollars in cash surpluses beyond statutory limits.

Comptroller's audits found that districts in most cases had built those surpluses by overestimating budgeted expenses, underestimating revenues or both. Districts often rolled over the excess funds from year to year without spending the money, audits showed. 

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