County to withhold tax revenues from towns

In the early days of September, town supervisors and village and city mayors across the county received daunting news in the mail. The county executive informed municipalities that in an effort to balance the county budget, he as the county’s chief financial officer would be shortchanging the amount of sales tax revenue that they will receive this year. My phone started ringing the next morning. The discussion continued this month as I made my rounds to town board meetings. The change will deprive our region of $184,157. The county executive wrote that the county started the year out by facing an initial budget gap of $40 million, which we are confronting with “a wide range of cost containments, consolidations and workforce realignments.” However, he added that “we cannot entirely buffer our partners in local government.” As a result he seeks to impose a sales tax cap to the local municipalities at $25 million, applying the overages to county expenses. The reduction will affect the village of Millbrook with a shortage of $7,000; Washington and Stanford by a reduction of $31,000 each; Amenia by $36,000; and the town of Pleasant Valley by $78,500.Although it seems unfair, municipalities have little standing to resist as there is no “entitlement” to a share of the county sales tax. The state Legislature authorizes counties to levy sales tax with the option to share it with the local municipalities, but there is no requirement for counties to do so. The executive’s letter noted that some counties around the state in a similar budget bind are choosing to withhold sales tax revenue altogether.State law allows not only counties, but cities, to levy sales taxes. The city of Poughkeepsie had levied its own sales tax when in the 1970s the county sought to impose a county-wide sales tax. Those were the years when the county charter was being written and the county Legislature came to replace the board of supervisors as policy and budget-making authorities. In exchange for giving up its city tax, the county agreed to “share’ the tax revenue with not only Poughkeepsie but with all municipalities. A formula of how much each town received was drawn up, but that contract expired in 2005 and has not been renewed. The executive’s letter suggested a task force be formed to revisit the formula and bring it up to modern standards.As an olive branch, the executive also proposed eliminating the 3-year-old election cost-sharing charge back to towns for the cost of elections. This was a 2009 budget innovation that remained a point of contention to most towns. Many felt that in requiring towns to pay for county-administered elections that the county was unjustly passing down its own costs to the local level.Lastly, he proposed an incentive to help reduce the overall footprint of government. From the reclaimed sales tax revenue, the executive plans to institute a $1 million competitive grant program that towns can bid on that will incentivize consolidation and improved efficiency ideas to reduce costs to taxpayers.Reactions to the plan were mixed. Most municipalities, while dismayed, were also understanding. Most recognize that county government would not be withholding tax revenue if it didn’t have to. With a $40 million budget gap still to overcome, we can expect more hardships ahead. The executive releases his total county budget for 2013 on or before Thursday, Nov. 1.Michael N. Kelsey represents the people of the towns of Amenia, Washington, Stanford, Pleasant Valley and Millbrook. Write him at KelseyES@yahoo.com Past columns can be read at https://blog.votemikekelsey.com.