County Legislature Approves Reduced Sales Tax Rate

By Holly Crocco

Towns and villages have asked the county for years to share sales tax revenue, and a recent move by the Putnam Legislature to reduce the sales tax rate has thrown gas on the proverbial flame.

The sales tax rate in Putnam is currently 8.375 percent, broken down as follows: 4 percent is allocated to the state, 4 percent to the county, and 0.375 percent to the Metropolitan Transportation Authority. Of the 4 percent collected by the county, 1 percent is considered an “extension” that began in 2007, when the state said counties could opt to add an additional percent.

That extension has been renewed every few years, and is up for renewal again.

During its April 1 meeting, instead of pursuing the full 1 percent, the County Legislature voted to reduce that to 0.75 percent – which equates to $5 million less in revenue.

For the past several years, the county has brought in millions more in sales tax revenue than has been budgeted. Last year, it collected $79 million.

The matter had the support of Legislators Toni Addonizio, R-Kent; Dan Birmingham, R-Southeast; Greg Ellner, R-Carmel; Paul Jonke, R-Brewster; and Amy Sayegh, R-Mahopac Falls.

Legislators Erin Crowley, R-Mahopac; Bill Gouldman, R-Putnam Valley; Laura Russo, R-Patterson; and Nancy Montgomery, D-Philipstown, wanted to see the full 1 percent pursued.

The division seems to lay between those who want to provide some sort of tax relief to people – whether county residents or consumers – and those who want to collect the full available tax and possibly share that with the local municipalities.

Jonke said he supports saving taxpayers money in any way the county can.

“I think a quarter-percent is a step in the right direction,” he said. “I don’t think we should take money from our constituents when we don’t need it.”

Crowley, however, said that even if the county can get by on $5 million less, that revenue could be helpful to the towns.

“It’s not going back to the taxpayers, it’s going back to anyone who comes to Putnam County to shop,” she said of the sales tax reduction.

Montgomery said much of the sales tax is generated by visitors who patronize restaurants, bars, catering services, and gas stations on their way through Putnam, and that the county should continue to collect the full 1 percent extra and share that money with the towns and villages that have to make the necessary infrastructure investments to accommodate those consumers using local roadways and public services.

“They’re the ones who hold the burden of generating this sales tax,” she said of the local municipalities. “They’re the ones who pick up the garbage. They’re the ones who provide and pay for EMTs responding to people falling up the mountain or falling on your sidewalk… They work on budgets that are tiny compared to our over $200 million county budget.”

Gouldman said he would rather see a reduction in the property tax for residents who live in Putnam, instead of a break for consumers – many of whom do not live within the county. Also, he said that while the county may be in good financial seating now, it needs to think further down the road.

“By not extending the 1 percent that we currently have, we’re at risk,” he said. “We need to think about the future, not just the short term.”

Birmingham, however, said money can still go back to sales-taxpayers via a “modest” reduction, at the same time that property tax relief is sought. While he voted for the county to pursue the full additional 1 percent of sales tax in the past, he said it was always supposed to be a “temporary tax,” and the county is in much better fiscal shape currently.

“We are sitting on top of the largest fund-balance-to-budget ratio this county has ever seen,” he said. “We are sitting on an unrestricted fund balance of $134 million… I think this sends a message that we can do what we want to do while saving Putnam County taxpayers.”

Russo disagreed, saying, “If we’re serious about tax relief, we should focus on reducing the property tax… I believe in cutting taxes when it provides meaningful relief, but I have yet to hear from a single resident who couldn’t make a purchase because of our current sales tax rate,” she said. “In contrast, I’ve heard from many struggling under the weight of property taxes and school taxes.”

Further, Russo said she is cautious about sharing sales tax with the towns, saying it could “open the floodgates” for them to increase spending.  

“If we do decide to share sales tax revenue, it should be done responsibly,” she said. “Towns and villages should be required to specify how the funds will be used, ensuring the money goes to actual tax relief for our residents instead of growing government budgets.”

Sayegh said that reducing the sales tax “in no way” limits the towns’ abilities to petition for revenue sharing.

“If there is an appetite for the administration, or this Legislature, to consider sharing sales tax, I look forward to those discussions,” she told residents at the April 1 meeting. “We have the opportunity to let you keep a little bit of money in your pocket – we’re not taking any money out of Putnam County coffers. We’re letting you just keep it in your pocket.”

While the resolution to reduce the additional sales tax from a full 1 percent to 0.75 percent passed the Legislature, it can still be vetoed by the county executive, who has expressed his opinion that the full 1 percent should continue to be collected.

Birmingham noted that if the county executive vetoes the resolution, it could lead to the county getting no extension of the added sales tax, meaning the county’s sales tax revenue would be 3 percent, instead of the 3.75 or 4 percent being debated.

Later in the meeting, Montgomery proposed a resolution to establish a sales tax revenue sharing mechanism between the county and the towns and villages, which a majority of her colleagues shot down for discussion and consideration.

However, debate on the concept of shared sales tax continued at the town level later in the week.

During the Carmel Town Board’s April 2 meeting, the board unanimously passed a resolution authorizing the supervisor to send a letter to the county, asking it to reconsider allocating – on a proportionate basis – sales tax revenue to the towns.

Councilman Robert Kearns expressed frustration with the county’s vote to reduce the sales tax.

“Instead of cutting sales tax, thereby depleting county resources, the Legislature should have focused on a fair sharing model that ensures local municipalities receive their fair share of funding,” he said. “At a moment when many residents are struggling with rising costs, the Legislature had an opportunity to provide meaningful tax relief such as a direct property tax reduction or strategic reinvestments into local services. Instead, they opted for a politically convenient sales tax which offers little benefit to the residents who actually live here and bear the burden of funding local governments.”

Kearns said towns make investments in vital infrastructure to support businesses, homeowners, and economic growth, which in turn benefits the county as a whole.

“By slashing sales tax revenue, the Legislature has made it harder for local governments to sustain these critical investments, including projects like reducing the financial burden of Carmel Water District Two,” he said. “This tax cut not only deprives Carmel of the possibility of receiving crucial funds, but also weakens the county’s ability to distribute financial support to towns in ways that would have a direct positive impact on taxpayers.”

Councilman Frank Lombardi agreed.

“We here in the Town of Carmel generate that sales tax revenue because we fund our police, we fund our roads and our improvements, which actually cause people to come here and shop in the Town of Carmel,” he said.

Later in the week, during a presentation at the April 3 Southeast Town Board meeting, County Executive Kevin Byrne said he would only consider sharing sales tax if it was done in a way that doesn’t compromise the county’s financial position, and allows it to continue to drive down the property tax burden and provide vital services.

“I wouldn’t want to jeopardize any of those programs, so whatever that share, it would have to be the right number and it would have to be for a targeted, specific purpose,” he said. “I would never support a blank check.”

Further, how that money gets distributed would have to be discussed, with some towns suggesting the revenue is divided by population, or assessed property value, or by how much each town generates.

“We get beat up a lot about the sales tax, (because) we have the traffic,” commented Town Councilman Eric Larca. “I would just want to make sure Southeast got its fair share, if that comes to.”

Byrne said Westchester divides its shared sales tax to municipalities based on assessed value, which he doesn’t think is fair because then wealthier communities may be getting more funds when they technically don’t need it.

Councilman Alex Mazzotta said that while sales tax sharing is a welcomed idea, shared services is another way to “divide” costs, and relief.

“I think that’s one gateway where we could have maybe greater collaboration,” he said.