WPCNR Quill & Eyeshade. News & Comment By John F. Bailey. May 1, 2008: The failure of the Common Council to get the ¼ %  sales tax increase implemented sooner this year, possibly caused by a deliberate delay  by not getting the measure to the legislature until January, cost the city about $2 to 2.5 Million in revenue this year – dooming the White Plains taxpayers to paying an additional $2.1 Million in property taxes in 2008-2009.

The Common Council did not grasp that delay of sending the home rule request to Albany in January – and not giving the legislature a chance to pass the ¼% increase by December 1— when they could have legally done, could cost the city five months of collecting sales taxes at the increased rate quarter percent.

The projected revenue the ¼% might have generated for those five months, January, February, March, April and May, 2008 is directly equal to the tax increase in the city budget - $2.1 Million payable by White Plains taxpayers.

When Mayor Joseph Delfino Tuesday evening reported that the bill enacting a ¼% sales tax raising the White Plains sales tax to 8-1/8 %  was signed at noon in Albany Tuesday by Governor David Patterson, City Hall was jubilant, expecting the sales tax hike to click in today. 

According to Executive Officer Paul Wood Tuesday night, the tax was to begin to be charged beginning at midnight this morning.

However, the City’s Chief Financial Officer, Gina Harwood told WPCNR the sales tax increase was always planned to go into effect June 1 because the city merchants need 30 days to adjust their cash registers.

Ms. Harwood explained that the city sales tax may only raised by law four dates a year: June 1, September 1, December 1 and March 1. She said the sales tax had been acted upon “very expeditiously” by the legislature after the home rule was introduced in January.

Virtually No Impact this year.

Harwood also said that the June 1 increase would mean only “trickles” in increase in the sales tax for this year in how it effects the 2008-09 budget. The real impact of the ¼% windfall increase will contribute to the 2009-10 budget.

She said the city sales tax figures are computed on an accrual basis, explaining sales taxes charged in June would not be included as revenue in sales tax collections until July when the merchants file their sales tax returns with the state. Harwood noted that the revenues from a month’s sales are always realized in the next month, expecting little impact in raising the 2007-2008 final sales tax figures.

Legislature did Their Job for White Plains

Asked if the state legislature could not have acted faster, implementing the sales tax by March 1, Harwood said that was not the way the legislature worked.  Harwood said the city had always planned to have the sales tax in place by June 1 so the additional sales tax revenue would impact the 2009-10 budget. She said the legislature was not in session in late fall, except for special sessions when they were dealing with “other things,” and that the legislature does not act on sales tax measures until after they pass the state budget.

She said she felt the legislature acted “very expeditiously,” saying the bill was introduced in January and was signed by Governor Patterson this week. She said the city is very grateful for the legislature fast action on the bill.

Council Tabling the Issue Before Election Cost possible $2.5 Million in Sales Tax

There was  the possibility of getting a sales tax increase implemented earlier if the Common Council had not delayed the home rule request over the amount of the tax increase prior to elections in November.

Mayor Joseph Delfino had brought up the ½% tax increase in the spring of 2007 and at no time did the Common Council object strenuously to that amount until fall elections approached. When they began to table the issue, starting in September,  the Mayor was mystified.

 The Common Council dragged its feet on the sales tax increase issue leading up to the fall election – tabling the issue three months in succession that called for a ½% increase, and demanded budget projections from the Mayor (which the state already had on file from its Aid to Independent Municipalities requests, apparently unbeknownst to the council and Assemblyman Adam Bradley who was requesting the projections that the state already had, though he may not have been aware of it at the time. Mayor Delfino refused to make projections at the time, blaming he would jeopardize labor negotiations. )  

After elections were safely over, the council agreed to a ¼% sales tax increase.

Legislature Timing Delayed by Council Politicking

 Conceivably the legislature could have acted sooner and the city would have had increased sales taxes being collected this year.  ( In fairness, it is also possible the former Governor at the time, Eliot Spitzer might not have signed it and the same January introduction would have transpired anyway.)

With the sales tax in effect December 1 or even March 1 – (though according to Harwood, implementation if passed just after the election would not have been possible the way the legislature takes up issues -- being out of session after elections.  The increase would have to be passed in the September, October period when the legislature was in session.)

With the sales tax quarter per cent in effect December 1, (in time for the holiday shopping season), White Plains conceivably would have gained five months of accrued $2.5 Million in additional sales tax (in January, February, March, April and May) from the extra ¼% increase. (The additional ¼% is expected to generate $5.6 Million in additional sales tax, according to city projections, an average of  $500,000 a month. )

The deliberate council effort  to delay the home rule request going to Albany so the legislature could have had the opportunity to enact it earlier apparently has cost the city $2 Million to $2.5 Million in sales tax, which could be a costly loss, given the continued soft Westchester economy.

It certainly is to the White Plains taxpayers who are paying an additional $2.1 Million in property taxes in the 2008-2009 budget – exactly equivalent to the failure to get the sales tax increase in place earlier – due to deliberate delay by the Common Council.

The Sales Tax Situation

To date, through March 31, 2008,  the city has collected $33.9 Million in sales taxes for the first  current fiscal year, 2007-2008 through three quarters, according to Ms. Harwood is 0.4% behind the 2006-2007 pace -- off 7.6 % from the third quarter last year. 

As of March 31 2007, 2007 the city had collected $34 Million. If the city keeps pace with last year's sales tax collection rate, it will receive $10.7 Million in sales taxes the final quarter ending June 30, 2008,  easily meeting its budgeted target of $43 Million, generating at this point an estimated $45 Million in sales tax – the projected amount in the city’s proposed 2008-2009 budget

What Might Have Been

The additional $2.5 Million the Council  gave up any shot of getting by their intentional possibly politically motivated delay  under the guise of protecting the taxpayer threw away – virtually burned by their election delay, would have increased sales tax collection to the $48 Million level this year.

Had the legislature only acted sooner and been given the chance to do so by the Common Council would  have easily put White Plains at the $48 Million plus level in sales taxes, generating a  surplus of $2.5 Million over budget ($43 Million in sales tax), now the surplus will be eroded by the $450,000 amount.

The case can be made the failure to act earlier by the Council hurt White Plains taxpayers rather than helped them.

Mr. and Mrs. and Ms. White Plains will be paying a 2-1/4%. sales tax to the City of White Plains  and a 1-1/2% sales tax to Westchester County; a 0.375%  sales tax to the Metropolitan Commuter Transportation District, and a New York State Sales Tax  of 4% for a total sales tax of 8.125% (8 and 1/8 %).