WPCNR WHITE PLAINS MONEY By John F. Bailey. April 19, 2004. Update 1 P.M. E.D.T.: Last week City Budget Director Anne Reasoner predicted she saw “no problem” in making the $37.8 Million sales tax receipts called for by the city’s proposed 2004-05 $110.5 Million budget.
As of March 31, the city had collected approximately $27 Million in sales tax in the first 9 months of the city’s fiscal year, meaning that the city must be expecting $10 million to be coming in from the state tax coffers within the next two months, because the budget sales tax projection for 2004-05 may only budget the sales tax receipts collected up through May 27 when the budget is adopted unless there is a way the June figures can be counted in the new budget.
Up 8.6% in March. Come on Baby!
Taking the city budget figures into perspective as of last week, Ms. Reasoner said the city had in the first three quarters, prior to reconciliation with the sales tax offices in Albany, noted that March sales tax receipts were up 8.6% over last year. In March 2003, the city collected $2,464,375 in sales tax, without the benefit of City Center’s Target, Circuit City, Applebee’s and theatres being opened.
Based on income being up 8.6%, according to Ms. Reasoner, the March, 2004 receipts with Fortunoff, Target, Circuit City, Applebee’s and the theaters opening, project at $2,676,311. But that could go up during reconciliation.
Now when you take the City Sales Tax Receipts for the previous 8 months, stated in the 04-05 budget as $24.6 Million, the city is sitting on a “ sales tax handle” of $27,276,311 through three quarters.
Sales Tax Numbers
FY 2002-2003 FY 2003-2004
First Quarter First Quarter Pct. +/-
July $2,661,236 $2,861,692 7.53%
August 2,560,810 2,715,226 6.03%
Sept 3,326,249 3,175,566 -4.5%
Total 1Q 8,548,295 8,752,484 2.39%
Second Quarter Second Quarter
Oct 2,750,303 2,797,544 1.72%
Nov 2,709,222 2,696,723 (0.46%)
Dec 3,491,176 4,519,408 29.45%
Total 2Q 8,950,701 10,013,675 11.88%
Total 6Mo $17,498,996 18,766,159 7%
Third Quarter Third Quarter
Jan 3,506,297 3,218,961 -8.19%
Feb 2,808,606 2,614,880* -7%
Mar 2,464,375 2,676,311 8.6%
Total 3Q 8,779,278 $8,510,152 -3%
Total 9 Mos 26,278,274 $27,276,311 4%
Total Figures compiled by WPCNR based on figures provided by the Budget Department, February 18, 2004.
* Estimated based on Total Sales Tax Collections Reconciled Through February ($24.6 Million for 8 months) reported in the 2004-05 budget.
A reconciliation of the March numbers could add more jing in the city till. Let’s say another $750,000 just for the sake of argument, the city could be looking at a handle of $28,000,000 through three quarters. This leaves a $10 Million sales receipt gap to be made up in the months of April and May, if the city is going to be able to budget $37.9 Million. (City projects $37.9 Million in Sales Tax in 2004.)
Rosy Scenario
WPCNR notes that this is an ambitious projection, because the city has not come close to hitting $5 Million a month in sales taxes in the last 32 months. The closest to $5 Million in sales taxes in a month occurred this past December, when the city collected $4.5 Million, a 29% increase over the previous December, thanks obviously to the opening of Fortunoff, Target and Circuit City, and the theaters.
However the sales tax numbers have not come close to that for three months. Previous to that was in December, 2001, when we hit $4.1 Million.
According to Robert Greer, Chair of the City Budget Committee, he recalls the sales tax figures being adjusted very late in May during The Westchester Mall opening eleven years ago, but he reports that the city budget sales tax contribution has to be established based on figures in prior to May 27, the Budget Adoption Date.
It could be Close
In Fiscal Year 2002-03, the city collected $8,135,166 in Sales Taxes in April, May and June, but only $5,135,454 in the months of April and May. Openings of Legal Sea Food (last week) and Barnes & Noble coming up in the next few weeks, could help considerably, but it is going to be close.
Last Quarter Sales Tax Receipts Fiscal Year 2002-03
April: $2,513,972
May: 2,621,482
June: 2,999,712
TOTAL 4th Quarter: $8,135,166
TOTAL 12 MONTHS: $34,413,440
What if?
The city might see a sales tax short fall as small as a million or as large as $4 Million, if the anemic 2003 numbers do not spike by a good million to a million and a half in April and May.
Say the April May numbers jump to $3.5 Million, the city is still 3 Million short of its $37.9 Million Sales Tax “Handle” they need to go with the projected budget.
To make up that gap, the tax rate increase would need to rise an additional 12%.
If you could include the June sales tax numbers, things would look rosier, but according to Mr. Greer, the city cannot do that.
If the sales tax actuals do not spike to eye-brow rising proportions, the Council might have to raise the city tax rate increase, from the currently projected 7.9%.
Budget Director Reasoner , WPCNR reminds readers, expects “no problem” in meeting the numbers, which is a good thing.
If they chose the tax rate route, they would have to go where from 3% to 12%, on top of the 7.9% if they chose to go with the figures through May only. For every $1 million in expenses, the city has to raise the tax rate 3%.
Cross Your Fingers Option. Bond?
Another option might be to go with the $10.5 Million budget as projected, and bond for any shortfall short term, banking on restoration of the dwindled fund balance (now sitting on $12 Million.), to play catchup ball in 2005-06.
Expected sales tax windfalls from the City Center, its rentups, and its new tenants, Barnes & Noble, Legal Seafoods, Zanero’s, Filene’s Basement, and Atlanta Bread Factory, might ride to the rescue of the ever decreasing fund balance.
However, sales tax windfall in the next year cannot be appropriated to the fund balance until the budget year 2005-06.
Fund Balance Blues.
According to the 2003-04 budget, for three of the last five years, 1997 through 02-03 expenditures have exceeded revenues. As the beginning of the five year period, fund balance totaled $21.4 Million (down from a high of $23.2 Million in FY 96-97), but last year (02-03) fell to $19.7 Million, and was forecast to be down to $12 Million by the end of 03-04.
There is more troublesome news. The 2003-04 Budget reports “It is anticipated that the City could have $4.4 Million or less in fund balance available to balance the FY 2004-05 Budget.”
It was predicted in last year's budget, that "During FY 2003-04, the City expects to see significant increases in sales tax revenues which should contribute to a re-growth in fund balance' however that increase cannot be appropriated until FY 2005-2006."
Unfortunately that increase according to the most recent figures released by city, has not happened in as significant growth as expected.
Assuming the city gets in $6 Million to $7 Million in Sales Taxes in April and May, they could use that last remaining $4 Million to balance the budget, just getting in under the budget wire.
2004-05 Budget Assumption:Shrinking Fund Balance.
According to the 2004-05 Proposed budget, it recommends an appropriation of $5.6 Million to balance the budget. However, it also notes the appropriation of fund balance for 04-05 is $2.6 million less than the current year. The budget notes "It is anticipated that the City could have $4.3 million or less in fund balance available to balance the FY 2005-2006 budget."
The Ending fund balance forecast for 2004-05 is $16.4 Million. Howver, those numbers are not there yet, since it depends on the acceleration of sales tax revenue.
New Establishments Cannot Open Fast Enough.
It should be noted that Zanero’s, Filene’s Basement, Barnes & Noble, and the Bread Factory have not opened yet at the City Center.
Including the June revenues would certainly help to make that $10 Million number, however, according to Greer, the sales tax figures have to be based on figures available just prior to Budget Adoption night, May 27. Perhaps a reprieve to consider the June figures in the budget would be the answer.
Note: Additional discussion of fund balance has been added.
