How should the municipal tax levy be limited during a transition year budget?

The proper method for limiting the municipal tax levy during a transition year budget involves careful adjustments to account for changes in financial circumstances while ensuring stability in tax revenues. The correct approach is multiplying half of the current State Fiscal Year (SFY) tax levy by 0.95 and 1.05.

This method reflects a balanced approach to managing the tax levy. By applying a multiplier of 0.95, it decreases the tax levy to account for potential declines in property values or other financial pressures. Conversely, using a multiplier of 1.05 allows for a slight increase to accommodate growth or inflation factors, ensuring that the municipality can still meet its financial obligations and support essential services. This dual factor acknowledges the need for flexibility in response to varying economic conditions while providing a structured method for determining the appropriate levy.

This approach avoids arbitrary cuts, which could hinder municipal services or fiscal stability. It also maintains a level of predictability for taxpayers, which is crucial during transition years when budgeting entails uncertainties.