ITHACA, N.Y. — The Ithaca City School District is considering imposing a new sales tax on utilities to maintain the quality of educational programming in the district. The tax would hit electricity, natural gas and phone bills and, according to New York law, can be approved by a majority vote of the Board of Education. A public hearing is scheduled for 5 p.m. Tuesday, Aug. 13 to gather input from community members.
Residents who live within the Ithaca City School District already pay a 4% tax on home energy sources including natural gas, propane, electricity, steam, oil, coal and wood used for heating. (City of Ithaca residents pay a city tax; outside the city, Tompkins County collects the tax.) The school district is allowed to levy an additional 0.5-3% tax on natural gas, propane, electricity and steam.
In addition, the district is allowed to collect sales tax of 0.5-3% on “intrastate telecommunications services” — meaning home and cell phone bills could go up.
According to an ICSD news release, the district is considering taxing utilities as a way of generating revenue beyond property taxes. “Despite New York’s equalizing state aid system, there remain significant disparities in fiscal resources available to support education among school districts, primarily due to the varying ability of districts to generate local property tax revenue,” the bulletin reads.
The 2019-2020 district budget projects about $90.2 million in property tax revenue, in addition to about $36.6 million in state aid, fees and revenue from other sources. Last year, ICSD spent about $23,300 per student, based on district enrollment and budget data. That’s about on par with the statewide average, which tops the nation according to the Empire Center for Public Policy’s analysis of the most recent Census data available.
ICSD says the new sales taxes are necessary because of a statewide property tax cap, which limits school district property tax rate increases to 2% in 2019-2020.
“The Ithaca City School District’s own ability to assess property taxes is limited each year by the New York State tax cap. Additionally, shortfalls in foundation aid paid to the district, combined with wage increases included in negotiated contracts, have necessitated that the ICSD seek out alternative revenue sources in order to sustain quality instructional programs,” the news release reads.
According to ICSD, “Unlike property taxes that disproportionately impact the district’s property owners, the utility tax would be a tax of general applicability, the burden of which would be shared by all users of utilities on an equitable basis.”
Rather than directly targeting property owners, the sales tax would impact anyone who pays for electric, gas or phone utility bills. Government agencies and non-profit organizations that are generally exempt from sales taxes, however, would also be exempt from utility sales tax.
ICSD would join 25 New York school districts if it were to levy a utility tax. There are 57 districts that are authorized to impose the tax; to be eligible, the largest city in a district must have a population of less than 125,000.
If the ICSD Board of Education votes to approve the tax, the soonest it could take effect would be Dec. 1, 2019.
Members of the public can offer comments at the Public Hearing at 5 p.m. on Tuesday, Aug. 13 in the ICSD Board Room at 400 Lake St. Those who are unable to attend can send public comments and testimony by email to the district clerk, Tricia Beresford, or can mail comments to Tricia Beresford, District Clerk, 400 Lake St., Ithaca, NY 14850.
Correction: An earlier version of this article stated 28 New York school districts impose utility taxes; 25 school districts currently impose utility taxes.