Dutchess County’s controversial sales tax revenue sharing plan is causing Hyde Park officials concern over how to make ends meet in their already tight budget.
Town Supervisor Aileen Rohr anticipates a shortfall this year that she says will put even more pressure on Hyde Park to make do.
“Sometimes we’re not able to do as much as we would like to meet residents’ expectations. We have to manage the dollars more carefully, manage each penny to its highest effectiveness,” she said.
Rohr told The Observer that the $975,000 Hyde Park will receive this year from the county is about $175,000 less than the town received before last year’s cap on revenue sharing.
“For the last 10 years, the town has received approximately $1.2 million each year. The amount we are expecting [in 2013] is at pre-2003 levels,” she added.
“It’s more difficult to provide the essential services that we need. The $175,000 typically would have gone to new road improvements. Town hall employees have not had a raise since 2009. There is just not enough money to give raises to non-union people. The projects that you might undertake, you just can’t. You have to live under austerity measures, essentially,” Rohr said.
Hyde Park’s 2013 budget is around $8.8 million, a 1.98 increase on the tax levy and just under the 2 percent state-mandated property tax cap. According to Rohr’s calculations, each $80,000 of lost revenue equals approximately 1 percent of the town’s budget.
The county plan, adopted by the legislature June 10, continues the 3.75 percent county sales and use tax and caps the amount of that shared with municipalities at $25 million. By contrast, in 2011, the county collected about $150 million in sales taxes, with $30 million of that going to municipalities.
The cap was first proposed by County Executive Marc Molinaro in 2012 to cover a $40 million budget shortfall at the county level. At the time, municipalities throughout the county, including Red Hook, Rhinebeck, and Milan, opposed the cap.
Under the new plan, the $25 million cap also serves as a guaranteed minimum so that even if sales tax revenues fall below the previous year’s amount, municipalities will know what amount to count on. The municipalities will also share in any increases in revenue, with towns and villages sharing 85 percent of the increase and the cities of Beacon and Poughkeepsie sharing the remaining 15 percent.
In a county news release on the new agreement, Molinaro defended the plan by saying, “We believe that by capping the sales tax and changing the growth distribution formula going forward, we have established an agreement which provides the most beneficial arrangement for our towns and villages, without further negatively impacting the two cities, which have borne the greatest impact in the change.”