City lawmakers voted last week to authorize breaking New York State’s “2 percent” property tax hike cap, acknowledging the likelihood of a third year in a row with a significant increase for Kingston taxpayers. The move comes as city Comptroller John Tuey warns that tax hikes can be expected to continue for the foreseeable future along with the ever-increasing cost of employee health insurance and other benefits.

“The revenue has to come from somewhere,” Tuey told members of the Kingston Common Council’s Finance Committee at its Sept. 9 meeting. “That’s why these past couple of years we’ve seen these property tax spikes and we’re going to see that pressure again next year.”

State law restricts taxing jurisdictions to a 2 percent (or whatever the state formula used to calculate the tax cap works out to) increase in property taxes over the previous year. For Kingston, which raised $21,496,726 in property taxes this year, that means the total amount raised could only increase by $536,384, far below anticipated needs. (The law includes carveouts for some spending which is not counted against the tax cap), Tuey said. But the law allows municipalities to break the tax cap with a supermajority vote from its governing body. Finance Committee Chair Alderman Michael Tierney (D-Ward 2) noted that a new labor agreement with the Kingston PBA approved by the council earlier this month would increase the budget by 3 percent next year.

“With the approval of the police contract, with all things being equal and nothing changes we would be raising taxes above the 2 percent tax cap,” said Tierney. “So we’ve already done it, unless you want to start firing people.”

Increases in the cost of employee health insurance, payments into New York’s pension system, debt service related to large infrastructure projects and other price hikes have driven the city budget from $43 million in 2020 to $63 million in the current budget. For example, Tuey said a family health insurance plan through New York’s own insurance program for public employees went from $30,000 in 2020 to nearly $45,000 today.

Tuey told lawmakers he expected the trend to continue in 2027 when the budget will be impacted by $2.5 million taken from a reserve fund to pay for the demolition of the Pike Plan canopies in Uptown Kingston and related expenses. Tuey said he also expects to see health insurance and pension payments rise by at least $1 million over current levels. The 2027 budget could also be impacted by ongoing negotiations with the Kingston Professional Firefighters Association which has been working without a contract for three years and the Civil Service Employees Association which has gone without a contract for two years. Settlement of those contracts could cost the city millions in retroactive payments in addition to whatever raises are negotiated.

“I’m seeing millions in new spending next year due to these pressures,” said Tuey.

The grim news about rising costs was offset somewhat, Tuey said, by sales taxes which are currently running $1.2 million above 2025 levels and state aid which has increased by $692,000. Over the past decade sales tax revenue has risen steadily taking pressure off the property tax levy resulting in no property tax increases from 2016 to 2024 while boosting the city’s reserve fund to a high of 22 percent of the total budget. But Tuey warned lawmakers that they could not count on sales tax revenue to continue its rapid upward trend.

“I’ve seen in the past that sales tax growth slows down, it goes flat and now we’re seeing millions of dollars in new expenditures,” said Tuey. “And that ends up putting a lot of pressure on property taxes.”

After going eight years without an increase in the property tax levy, Kingston has seen taxes rise by 18.8 percent over 2024 levels. Last year, Noble eliminated 20 currently vacant positions in the city workforce in an effort to minimize the tax hike. But Mayor Steve Noble said last year that he had no plans to lay off employees or make major cuts to city services. Instead, Noble has moved ahead with major initiatives, including hiring 14 new firefighters to allow the Kingston Fire Department to handle emergency medical transport in the city and bonding for $10 million to refurbish a former ambulance garage that will serve as KFD’s new central station.

Noble is expected to present his proposed 2027 budget proposal next month.