The recently approved increase in the county sales tax, which took effect Aug. 1, will bring in tens of millions of dollars to Westchester County annually, with a portion of the funds going to local municipalities and to local school districts.
Local officials responded positively to the anticipated windfall. But we give the tax rate hike an 8 out of 10 on our legislative action rating scale.
Sales taxes exert their own kind of pain, to be sure. With the 1% increase approved by the legislature and signed into law by the governor, the county will now add a penny to every dollar of taxable consumer purchases (excluding groceries), collecting 8.375%, up from 7.375%. That’s the same level as in Putnam and Rockland counties, but below Nassau, Suffolk and New York City.
These taxes also regressive, hitting lower-income residents harder than others. And the 1% bump was a steep jump and the first in many years — the county tax rate increased 0.5% in 1981, 1% in 1991 and 0.5% again in 2004.
For these reasons, we can’t say it’s a perfect solution (hence the slight markdown on the above rating).
But then, consider the numbers. The county projects it will take in an additional $13.6 million for the remainder of this year as a result of the tax hike, and $29.5 million next year. Towns and municipalities will receive a proportional share, based on population, of 20% of the totals, and school districts will each get their share of 10%.
“We are sharing back the 1% that the state has approved for us,” County Executive George Latimer said, shortly after the tax measure was enacted.
So, over the next 17 months, Latimer’s team estimates the following revenue gains for our village and local school districts:
Village of Scarsdale: $1.3 million
Scarsdale School District: $700,500
Town of Greenburgh: $3.3 million
Edgemont School District: $291,250
And what will villages and school districts do with these unplanned revenue dollars? Latimer’s answer: “Whatever they want.”
Scarsdale Village Manager Steve Pappalardo told the Inquirer the additional revenue should have a positive impact on the local tax levy, enabling them to keep village taxes lower, and Stuart Mattey, Scarsdale schools’ assistant superintendent for business, said if the windfall becomes recurring revenue, which it is likely to be, it could play in to new educational initiatives during school budget discussions.
In the minds of local and county elected officials, the beauty of this whole deal is that it takes some pressure off property taxes serving as the main source for funding rising costs like salaries and benefits of town workers or school staff. This is particularly the case in towns like ours with limited commercial bases.
Revenue from the sales tax can also go toward deferred projects like road repairs, without having to authorize additional borrowing. Or, they can be used to shore up depleted reserves.
Latimer proclaimed, “This is found money, in the sense that neither the town nor the school district has to vote to increase any taxes” to finance these added expenses. “It’s very important to note that the additional money can help either keep taxes down or they can use it for capital projects, whatever they want to do,” he added.
Budget planning for 2020 starts later this year. Soon, we’ll have a clearer idea of how the Village of Scarsdale and Scarsdale and Edgemont school districts intend to spend the extra money.
As for Westchester’s plans, Latimer underscored two priorities. “We intend to freeze property taxes and get our bond rating back up,” and it should also help ease the increased burden many residents and taxpayers face due to the recent changes in the Federal Tax Plan.