A growing share of New York’s cities, counties, towns, villages and fire districts are preparing for the possibility of raising property taxes beyond the state’s tax cap, a trend State Comptroller Thomas DiNapoli says reflects mounting pressure on local budgets as pandemic aid disappears and routine costs continue to climb.
The shift is most pronounced among cities. For fiscal years ending in 2026, 45% of cities reported plans to override the tax cap, compared with just 13.1% in 2022. Villages followed at 35.5%, while 31.5% of fire districts, 28.6% of towns and 24.6% of counties also reported plans to exceed the cap if necessary.
Those filings don’t necessarily mean taxpayers in those communities will ultimately see increases above the cap. Local governments report their intentions before budgets are adopted, and some pass override measures as a precaution before ultimately keeping their tax levy within the limit.
Still, DiNapoli’s office said the growing number of planned overrides is a warning sign that more local officials believe the revenue permitted under the cap may not be enough to balance their budgets.
“Many local governments are under fiscal pressure, with rising costs and slower growth in recurring revenues,” DiNapoli said. He urged officials to be transparent with residents about the financial challenges they face and the decisions being considered to address them.
Why are more considering overrides?
New York’s tax cap generally limits annual property tax levy growth to the lesser of 2% or the rate of inflation, although the actual calculation includes exclusions and adjustments.
Cities, towns, villages and counties can override the cap with approval from at least 60% of their governing boards. Fire districts face a similar threshold. School districts must put an override before voters and receive at least 60% approval.
The latest numbers reflect a sharp reversal from the financial conditions many municipalities experienced during and immediately after the COVID-19 pandemic.
By 2021, billions of dollars in federal relief were flowing to New York local governments through the American Rescue Plan Act and other programs. At the same time, local sales tax collections surged as consumer spending rebounded and inflation pushed up the taxable price of goods and services.
That combination temporarily reduced pressure on property taxes.
For cities, counties and towns, planned tax cap overrides dropped significantly by fiscal 2022. But that relief proved temporary.
Federal aid has since wound down, while inflation remained above the state’s 2% cap for several years and sales tax growth slowed. From 2022 through 2025, local sales tax collections outside New York City grew at an annualized rate of 2.3%, compared with 3% before the pandemic.
The result is a widening gap between what some municipalities are spending and the recurring revenue available to pay for it.
Cities appear particularly exposed.
The comptroller’s report notes that recurring funding through the state’s Aid and Incentives for Municipalities program has essentially remained flat for years. State budgets from 2022-23 through 2026-27 provided about $715 million annually through the program to municipalities outside New York City, roughly the same level appropriated more than a decade earlier.
At the same time, city spending has risen substantially.
Between fiscal 2019 and 2025, spending on public safety increased at an annualized rate of 4.4%. Transportation spending grew 5.1% annually, while sanitation costs rose 4.6%.
Those increases substantially outpaced the rates seen before the pandemic.
Cities reached a record high in planned overrides for fiscal 2025, when 49.2% said they intended to exceed the cap. The share dipped slightly for 2026 but remained historically elevated at 45%.
Counties have followed a similar trajectory. Just 3.5% reported plans to override the cap in 2022, compared with nearly one-quarter for 2026.
Counties also received more federal pandemic relief per resident than other classes of municipalities, meaning the expiration of that temporary funding can create larger holes where it was used to support ongoing expenses.
Towns, villages and fire districts feel the pressure
The increase has been more gradual among towns and villages, but the direction is the same.
For fiscal 2026, 28.6% of towns reported plans to override the cap, up from 16.6% in 2022. Among villages, the rate climbed from 22.7% to 35.5% over the same period.
Fire districts may face an especially difficult equation because they rely heavily on property taxes and received little of the pandemic-era state and federal aid that helped other governments.
Property taxes accounted for more than 82% of fire district revenues in fiscal 2025.
At the same time, personnel costs have risen rapidly. Salaries increased at an annualized rate of 7.6% between 2019 and 2025, while employee benefit costs increased 4.4%.
The comptroller’s office also pointed to another long-term problem: fewer volunteer firefighters.
Statewide volunteer ranks have declined by roughly one-third over the past two decades while emergency calls have increased, according to figures cited in the report. That can force departments to rely more heavily on paid personnel, adding another recurring expense to local budgets.
The share of fire districts planning overrides reached a record 34.9% for fiscal 2025 before slipping to 31.5% this year. That’s still well above the 18.6% recorded in 2022.
School districts remain the exception
School districts are still far less likely than municipalities to pursue an override, in large part because doing so requires approval from at least 60% of voters.
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For fiscal 2026, 4.9% of school districts reported plans to exceed the cap.
That’s a relatively small share, but it has more than doubled from 2.4% in fiscal 2024.
Schools were buffered from some of the pressures facing municipalities by significant federal pandemic aid and increases in state education funding. New York also completed a multiyear effort to fully fund the Foundation Aid formula, injecting billions of additional dollars into school districts.
But federal relief has now expired, and the comptroller’s office said planned overrides have begun to increase as those temporary resources disappear.
An override isn’t necessarily a sign of failure
DiNapoli’s report cautions against treating every override as evidence that a municipality is in fiscal distress.
In some cases, exceeding the cap can help a government avoid a larger structural problem by aligning recurring revenue with recurring expenses rather than relying on reserves or temporary funding to cover ongoing costs.
That distinction matters because local governments sometimes adopt override measures simply to preserve flexibility during budget negotiations.
A municipality can report that it intends to exceed the cap and ultimately remain below it. Conversely, it can initially plan to stay within the limit before later determining an override is necessary.
The broader trend, however, is difficult to ignore.
Across nearly every type of local government, more officials are leaving open the possibility that the tax cap won’t provide enough revenue to maintain current services.
The fiscal environment that temporarily gave municipalities breathing room after the pandemic is changing. Federal relief is disappearing, sales tax growth has moderated and the cost of public safety, transportation, sanitation, employee benefits and other basic services continues to rise.
For taxpayers, that doesn’t guarantee a wave of above-cap property tax increases. It does mean more communities are entering budget season with fewer easy options — and a growing number of local officials are preparing for the possibility that staying under the cap may no longer be one of them.
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