"It smooths out the discrepancies, the highs and the lows," Sen. Suzie Oppenheimer, D-Mamaroneck, said of a measure she introduced Monday on how schools calculate contingency budgets.

Currently, if voters disapprove a school budget proposal, the district can offer another budget for a second vote or it can go to an austerity or "contingency" budget that can only grow so much from the previous year.

The contingency spending increase is limited to 4 percent or 120 percent of the Consumer Price Index, whichever is less.

With deflation rather than inflation running through much of the economy, school budgets based on the CPI would stay level or drop less than half a percent this year.

"We never really counted on a deflationary time," Oppenheimer said.

But allowing the CPI calculation to be based on a five-year average, the budgets could go up about 3 percent.

Oppenheimer acknowledged that voters in many places are angry about rising taxes, including school taxes. "I'd almost call it a mini-revolution," she said before introducing the bill in the Senate.

Members of the education lobby said the measure could help prevent deep cuts and layoffs that could be necessitated by contingency budgets that actually cut spending year to year.

While school tax hikes last year increased a modest 2.1 percent average statewide, the situation is more difficult this year, said Robert Lowry, associate director of the state Superintendents Council.

Gov. David Paterson is proposing more than $1 billion in school aid cuts and this year's federal educational stimulus money already is spent. Thus taxes could be rising sharply this year, warned Lowry.

Lowry noted that in years past, when the state made sharp cuts, local taxes rose sharply. For instance, he said, they rose an average of 10 percent in 2003.

The contingency proposal, approved 52-2, was part of a larger package aimed at boosting school finances.

The package also would help ease paperwork and auditing requirements for schools, as well as measures that would provide more flexibility in using unspent funds. The proposals must pass the Assembly and get the governor's signature before becoming law.

Despite the other measure, which lawmakers dubbed "mandate relief," the contingency component drew sharp criticism from budget watchdogs.

"They are looking to have it both ways," said Edmund McMahon, director of the Empire Center for New York State Policy and a frequent critic of school spending.

"This might be called the 'homeowners property tax increase of 2010' bill," McMahon added, explaining that a five-year average would include an inflationary cost of living or CPI spike in 2007 due to a jump in oil prices.

"That contingency provision will have the impact of costing taxpayers more in the short-term," added Brian Backstrom, vice president of the Foundation for Education Reform and Accountability, which also is critical of school spending.

Backstrom said the overall concept of using a multi-year average makes sense in order to guard against severe fluctuations.

"It may be good policy but it surely shouldn't be cloaked in rhetoric that it will save taxpayers money, because in the short term this one will cost people more."

Contingency budgets have been a source of confusion and occasional frustration for voters and school administrators since the rules surrounding them were introduced more than a decade ago.

The rules, for example, include a list of exceptions to the caps including expenses related to court judgments, rising student enrollment and other factors.

School administrators have occasionally pointed to those exceptions to threaten even steeper increases in taxes, should contingency budgets go into effect.

Conversely, the governor's current budget proposal seeks to prevent school budgets from falling below the prior year's amount if there is a contingency plan.

"The current statutory provisions for the calculation of the contingency budget cap does not account for a period of deflation," states part of Paterson's proposal.

School budget votes this year are set for May 18.

Reach Rick Karlin at 454-5758 or rkarlin@timesunion.com