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Thursday, January 31, 2013

Capital project outside the annual budget

Question: Why is the proposed $2,155,000 capital project to be voted on Feb. 5 being done outside of the standard annual budget process?

Answer: According to New York state law (Section 37; also Education Law Section 416), a school district cannot secure a bond without voter approval. And most school districts must secure a bond to pay for capital expenditures because paying for capital expenditures using general budget funds is impractical - it would require a massive one-year tax increase to fund the project, creating unpredictability in the local tax levy that school districts generally try to avoid. New York's new property tax levy cap also makes it impossible to raise these kinds of funds through the regular budget process without triggering the need for a 60% supermajority of voters to pass a budget proposal.

We also need to hold the vote on the capital project proposal prior to the May 21 budget vote in order to get needed renovations started during the summer of 2013. Given the lead time needed to get renovation drawings approved by the state and to solicit bids, waiting until May to vote on the capital project would mean renovation projects could not begin until 2014.
- answered by Marco Zumbolo, school business administrator

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