County Executive George Latimer unveiled a proposal Thursday to hike the county sales tax by 1 percent cautioning that Westchester would face dire financial consequences unless it raises more revenue.
The pitch to increase the tax to 8 3/8 percent, through an action called the Westchester County Property Taxpayers Protection Act, would stabilize Westchester’s finances and help municipal and school district coffers through a share-back plan, Latimer said.
In exchange for the additional sales tax, which the administration estimated would raise about $140 million a year, Latimer pledged to freeze county property taxes for 2020 and 2021. A higher sales tax would also allow the county to remove the controversial proposal to lease the County Center parking lot from consideration along with other “one-shot” deals while largely eliminating the need to borrow to fund pension costs and tax certioraris, he said.
It has been estimated that leasing the County Center lot to an economic development corporation would raise about $23 million this year to help balance the 2019 county budget.
A sales tax increase would require approval by the state legislature followed by implementation legislation by the Board of Legislators. An Assembly bill (A.4343) has already been filed on the county’s behalf, Latimer said.
The county executive was surrounded by a bipartisan group of about a dozen Westchester mayors and supervisors at the county office building in White Plains who support the plan. He said the move is needed because the county’s “financial picture is in a crisis situation and will only get worse if we don’t take bold action.”
“If we do not get additional steady forms of revenue outside of property tax revenue this county government will go under in due time and so will the municipal governments,” Latimer warned.
The announcement comes several months after the county’s bond rating was downgraded from AAA to AA1. Last fall, Latimer and the Board of Legislators were forced to close a $70 million budget gap. Westchester’s depleted fund balance has sunk to about $70 million, down from about $170 million, which played a significant factor in the financial agencies’ ratings, he said.
Under the plan, the county’s municipalities would share 20 percent of the additional revenue raised by the increase while school districts would receive 10 percent. The shares would be based on the population of each municipality. A similar formula would likely be devised for the school districts.
Should the county hit its estimate of raising an additional $140 million, that would leave about $98 million extra for the county each year. Of that, $15 million would be placed into fund balance to start replenishing the reserve fund, Latimer said. Money would also be set aside to pay for capital projects, constantly escalating health care expenses as well as paying for pension obligations and tax certioraris rather than borrowing.
Latimer said Westchester has failed to take in enough revenue with years of flat tax rates before he came into office, putting the county into a precarious fiscal situation. Closing a $70 million budget gap last fall could be offset by a .5 percent sales tax increase alone. However, it but would require the equivalent of a 12 percent property tax hike for the already overburdened property owner.
“We are saying that that transaction, the sales transaction, is a more fair way to fund the programs of the government then to go back to the property taxpayers and generate more money through property taxes,” Latimer said.
The county executive disputed any notion that the consumption tax would hurt poor residents. Latimer said Westchester’s four largest cities, Yonkers, White Plains, Mount Vernon and New Rochelle, which have among the largest concentration of poorer residents, already have a sales tax of at least 8 3/8 percent. (The sales tax for Yonkers is 8 5/8 percent.) Cities have the authority to set their own sales tax.
“When you look at the wealthier communities, they are the ones paying a less amount of sales tax as residents,” Latimer said.
The local officials on hand shared the county executive’s enthusiasm for the plan. Mount Kisco Mayor Gina Picinich said it would not only help the county but municipalities and school districts would receive an infusion of fresh revenue.
“For us, to get the recurring revenue, we can work to hold the line on property taxes,” Picinich said. “This is real important. We all know that. We all live here in Westchester County.”
North Salem Supervisor Warren Lucas said while neither he nor any of his colleagues like to raise taxes, municipalities must provide certain services that cost money.
“We’re not talking about grandiose things,” Lucas said. “We’re talking about very, very basic things that we need on a day-to-day basis, whether it’s running a sewer system or taking out the garbage.”
Latimer is hopeful that the legislature can consider the measure in time for the Mar. 31 budget passage so the county could receive the additional revenue for the second half of the year. If it gets pushed to later in the session, the higher sales tax would likely not go into effect until the final quarter.