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ALBANY As inflation drops, so too does New York's property-tax cap -- and it'll mean a tighter squeeze on local budgets in 2015.

The property-tax cap limit will be 1.56 percent next year for counties, towns and most cities that run on a fiscal year that starts Jan. 1, the state Comptroller's Office confirmed to Gannett's Albany Bureau on Thursday.

The levy limit on local governments without needing an override is 1.66 percent this year. It was 2 percent the previous two years.

"Local governments are likely going to be faced with even greater financial constraints next year. Simply put, a more restrictive cap means difficult choices on spending," said Brian Butry, a spokesman for Comptroller Thomas DiNapoli.

In 2011, Gov. Andrew Cuomo and the state Legislature enacted a property-tax cap to address New York having among the highest taxes in the nation. And it's worked: the cap has limited the growth to less than 2 percent a year in most cases.

"New York's property taxes have been held to an average growth rate of just over 2 percent during the past two years, less than half the rate of growth over the previous 10 years," a report in June from Cuomo's office said.

The cap limit each year is set at either the rate of inflation or 2 percent, whichever is lower. And it's been lower than 2 percent over the last two years.

For schools and larger cities that run on a fiscal year that starts July 1, the cap this year is 1.46 percent. The cap limit can fluctuate per taxing district because growth in a community and some pension costs are excluded from the cap calculations.

Nonetheless, the cap has squeezed budgets for municipalities and schools at a time of stagnant revenue and growing costs, local leaders said.

State aid to local governments has been flat in recent years, and they said the state hasn't done enough curb unfunded state mandates.

"In combination with stagnant state aid, the lower cap will further squeeze local governments and their services," said Peter Baynes, executive director of the state Conference of Mayors.

Gannett reported last week that sales-tax revenue – the largest income source for counties – has been largely flat outside the New York City area.

"Counties rely on sales and property taxes to fund state mandated services and local operations," the state Association of Counties said in a statement. "The fact is these costs are rising above available and projected revenues."

Cuomo has countered, though, that the state has picked up costs for Medicaid from counties, enacted a new pension tier and made other reforms.

The tax cap can be overridden by a 60 percent vote of the local governing board or in the case of schools, by a 60 percent vote of the public.

In the current fiscal year, about 70 percent of local governments stayed within the cap, while about 95 percent of schools did.

The state's teachers' union is suing to overturn the cap, saying it is unconstitutional.

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