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WPCNR QUILL AND EYESHADE. By John F. Bailey. Based on data from the New York State Department of Taxation and finance. January 29, 2021:

White Plains did not have a great December in retail sales.

The city ended the first six months of 20-21 Fiscal year down $5,063,506 down to $21,718,689, compared to $26,950,563 in July-December of 2010

It was the sixth consecutive month of declining sales tax revenues for White Plains.

If the city earns the $25,317,531 they did last year from January to June, they will earn $47,036,220 for the year, down $4 Million from the 219-20 total.$51 Million.This will mean they will not be able to fund the anticipated $5,000,000 the city devotes to the Taxpayers Stabilization Fund each year, which ostensibly pays anticipated pay increases. To meet the anticipated need to shift the required funds into the Tax Payers Stabilization Fund ($5,000).

Since they need $4 Million  even if Jan-June numbers equal last January to June, the city would either have to do a combination of property tax increase and expenditure cutting effective now.

He city is hamstrung by its own charter which forbids the city from budgeting any amount of sales tax revenues that are more than the city made in the previous year.

It the sales tax revenues continue to decline at the 20% trend, the deficit will continue to climb.

If softness continues at the 20% declining pattern, the city will be down $5,237,874 from the $25,317,531 Million made in sales taxes from January to June 2020 last fiscal year.

If the handle the next six months (including January just about over) is 15% down the deficit is $3.8 million ,  If 10%, $2.5 Millon, 5%, $1,265,867 Million.  

The City has until April to craft the new 21-22 Budget.  If the January figure doesn’t robustly bounce to  $4,549,018 figure of January 2020, that will be very bad news.

If the revenue drain continues in February and March, that means the city has to consider cuts in something, capital expenditures particularly would be a good start.

Possible Solution: Change the City Charter Prohibition on Forecasting More Than You Made the Previous Year.

The city could bet on a turnaround midyear and not incur having to make cuts.

If the Common Council changed the charter rule allowing them to raise the $46 Million they budgeted for 2019-20 and will be down slightly from, by say the percentage of their budget deficit which now looks to be around a maximum of $5 Million.

They could change the charter to say the Council in anticipation could raise the projection of sales tax beyond the amount raised the previous year, say by no more than 5% or liberally, 10%.

Make the change in the charter time-limited to 3 years. This would allow the city to avoid the draconian political third rail of raising taxes and cutting jobs and services.

Such an Emergency Financial Initiative would help to craft the 21-22 budget with a safety value if spring revenue continue soft.

If the city is down $9 million in revenue from sales taxes by budget time, the city, to meet the next year budget would have to choose between a 27% property tax increase flat out, or cutting expenses $4-1/2 Million and raising property taxes 12% or so.

If the next 6 months come back even or even close to even, the city could avoid cutting expenses, services and raising property taxes to draconian, vote burning levels.

Raising the charter restriction to allow a projection within a 5 % or 10% increase is not too draconian. (Not 27%).  That would expect $4.6 Million approximately what the deficit shaping up now is looking like, if January to June revenues sustain themselves at last spring levels.

A TIME LIMIT would have be placed this “Emergency Financial Inititive” (EFI) to avoid abusing expectations.

A 5% increase in the charter amount from the previous year this year would be $2.3 MILLION. Ability to raise it 10% would raise the $46 Million  4.6 Million, exactly the amount the city has to replace the way things are doing.

Westchester County finished with $680.7 Million in Sales Tax Receipts reflecting their 1% sales tax increase.

The final figure is 9.8% higher than 2019 when the county earned $619.8.

The county blamed the covid crisis for not reaching their prediction of $748 Million in sale tax receipts. The county was chagrined to realize that an approximate $67 million sales tax shortfall from their original projection of a 27% overly optimistic expectation of increase in sales tax revenues, and blamed it on Covid-19.

Westchester County is not restricted to keeping sales revenues projections no more than the previous year, is insightful as to what happens when hope and optimism are blind to reason.

The Covid epidemic actually helped in erasing the deficit the county blamed it for, by enabling the county to replace the sales tax gap by shifting covid funds not used by the end of the year into the county reserve fund.

They moved $40 million of the reserve funds into the general budget, and supplemented it with retirements and other savings to close the 2020 budget balanced.

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