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Important Tax information for Village of Cayuga Heights Residents

posted Dec 29, 2020, 9:59 AM by Town of Ithaca   [ updated Dec 30, 2020, 11:46 AM ]

While most Town residents (based on an assessed residence value of $300,000) will see a slight decrease in their 2021 tax bill from 2020 that is not true for Town residents in the Village of Cayuga Heights, because of the way that Town Funds are separated into Townwide and Part-Town Funds.

The Town has 2 Highway Funds, one for the 25% of our Highway expenses that all Town residents (including Village residents, pursuant to NYS law) share in, and a separate one for the 75% of expenses that just the Town residents outside the Village are responsible for. 

Because the Village receives from the County a payment of Sales Taxes that is taken from the Town’s share of Sales Taxes, state law says we can only apply our Sales Tax payments from the County to our Part-Town Funds – so that would be our General Part-Town Fund (covering our Planning and Codes Departments) and our Highway Part-Town Fund.  The theory must be that if Village residents are benefitting from a decrease in Village property taxes by the use of a Village’s share of the Sales Tax, then the reduced benefit to the Town property taxes from the reduced share of Sales Tax the Town gets should just go to the Town residents outside the Village.

Unfortunately, over the past few years, we had mistakenly applied some of our Sales Tax money to our General Townwide Fund, so all town residents, including Village residents, were getting the benefit of lower property taxes in that Fund, when that benefit should have been going just to Town residents outside the Village by having the Sales Tax applied to only the Part-Town Funds. 

In reviewing our financials, the State Comptroller alerted us to the fact that we had misallocated the Sales Tax, so in order to rectify that we had to make a one-time adjustment.  Since all Town Residents (including Village residents) benefited from a lower tax rate in the General Townwide A Fund for the past few years, we had to increase the property taxes collected in that Fund for one year to make up for the Sales Tax that had been misapplied to that Fund for the past few years.

Thus in the future we will no longer be applying Sales Tax to the Townwide Fund, and after we have made this readjustment in 2021, the property tax rate in the A Fund (which is about 80% of the Town taxes that Village residents pay) can return to the more normal amount that it had been previously.

As we start to work on the 2022 budget, in the Spring, the Budget Committee will take a close look at the fund balances and the accounts and the implication for all Town and Village residents to the extent that we can do this and follow NYS Comptroller’s Office rules.