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WPCNR QUILL & EYESHADE. News & Comment By John F. Bailey. October 16, 2007:
Happy Days are here again. Mayor Joseph Delfino, in a letter to the media Tuesday, campaigning for the ½% sales tax increase he has proposed,( which the Common Council has delayed, pending budget information), wrote “This action would generate more than $10 Million annually, which would relieve the property tax burden on our residents.” He also stated “It would also pass on the benefits of new development directly to property taxpayers. Ten Million Dollars is equivalent to a 30 percent property tax increase.”
The Mayor is too modest.
From the looks of the 2008, 2009,2010 and 2011 city projections (reported exclusively last week for the benefit of the deprived Common Council by yours truly, The CitizeNetReporter) start a new era for the White Plains taxpayer who has subsidized the White Plains Renaissance and the City School District the last five years.
The city Commissioner of Finance has devised budgets going out the next four years, demonstrating the Mayor’s ability to execute a balanced budget without the ½% sales tax increase or a hotel tax.
Looking at the budget figures, (you may look at them along with this article by going to http://www.wpcnr.com/images/pdf/wp_101107.pdf), the city reports to the state several positive things thanks to the Mayor’s “smart finance” that has put together this long range financial planning.
The Mayor and his administration are way too cautionary about this budget. The Mayor said he could not guarantee the budgets last week in another cautionary letter delivering the budgets to Assemblyman Adam Bradley as requested.
Look what the Mayor’s projections promise:
1. The ability to cover a 5% increase in salaries, ($71 Million to $81.2 M) and an 18% increase in employee benefits over the next four years.
Effect: This ensures labor peace and harmony for half a decade. If the projections hold to the mark, this alone sets up Mr. Delfino for a prosperous fourth term beginning in 2010, or presents an orderly house for any successor to take over, positioned for prosperity. The city by their projections has found revenues to pay for this salary growth plus benefit increases, raising property taxes 7%.
2. Strategic Management of Certioraris through Debt
Effect: By planning to pay off certioraris in the pipeline using bonding, the administration mitigates fund balance depletion and softens property tax impact by finessing a long term problem.
This deft debt management, using debt as a revenue producer gives the downtown development and expected new hotel and residents’ influx the time to catch up to the city debt and perhaps surpass it.
It is a prudent way of employing the city’s credit rating to advantage. What good is a good credit rating if you don’t use it?
Though debt service doubles, based on the Mayor’s projections, the sales tax without the ½ % increase, is expected to march on an inexorable natural progression of 5%, as predicted by the city, covers this modest increase in debt service
Let’s figure it out, class:
2005-2006 generated $43 Million in sales tax, growing 5% as the projections predict, that generates $2.2 Million in 2008-2009 easily handling the debt service increase of $587,500 indicated over the next four years.
As long as the development continues to pay off, and there is no reason to expect with the swells coming into the Ritz-Carlton, that it will not, the Mayor is betting that the city’s debt rating and the ability to handle the debt will continue to handle anything the city needs to cover of an extraordinary nature.
3. PILOT GROWTH adds $4,183,970 to revenues through 2010-2011.
Effect: Since each of the 10 PILOT agreements still in effect goes up a projected 7% in payments each year, they add $583,970 to the tax rolls total over the next three years. The $3.6 Million additional difference is counting the $1.2 Million payments a year, Nine West and Clayton Park contribute combined to property taxes when those two properties go back on the tax roll in July 2008. (Together they pay $484,020 this year)
The PILOT growth alone takes care of the extra debt service for the certioraris according to the projected budgets.
4. Property Sales End.
The budget projections call for $5,000,000 in real property sales this fiscal year and $1,000,000 in each of the next three years which is the 10 Bank Street parking lot, sold as part of the Bank Street 20% Affordable Housing deal.
Effect: The city has apparently according to the projections kicked its one-shot habit of selling city assets, another plus for these projections. The Projections call for no other land sales. (Unless of course the railroad station development is put back in play where there could be a sale of land, and no longer a fire sale either.)
5. $99 Million in Authorized Debt. Plenty of Credit Line Left.
According to the 2007-2008 budget White Plains may borrow an additional $386 Million based on New York State guidelines. The city currently has $99.2 Million in outstanding indebtedness, up 15.5% due to the bonding for the Longview Avenue Garage in support of the White Plains Hospital Medical Center and the assisted living facility project at that location. Debt payments are averaging $6 Million a year through 2013 according to the 2007-2008 budget.
Effect: the city has plenty of debt availability, while poised on what projections show to be steady revenue growth.
The ½ % Sales Tax Increase Request a Timely Opportunity.
For years, this commentator and financial aficionados have criticized the Mayor’s financial decisions.
The Mayor’s sales tax increase suggestion of ½% made this spring is an intriguing opportunity for the Mayor to give back to the taxpayers of White Plains who have had faith in his Three Revitalization Plans. They have retained their faith in Mayor Joe despite apparently necessary double-the-rate-of-inflation property tax increases, due, as the Mayor has long pointed out, to certiorari increases.
Giveback Time for Taxpayers.
As the Mayor alluded to in his letter to the media, the sales tax increase — if the Common Council takes into account and agrees the Mayor’s projections are on solid ground, and (there is no reason why they should not since they approved all the Mayor’s financial decisions) — is an unprecedented opportunity to turn things around on taxes in White Plains.
Once again White Plains can take the lead from the hundreds of cities that bleed their populaces due to their lousy financial management and give the White Plains taxpayer meaningful tax relief in real dollars off the top!
When originally presented, Ms. Cuneo-Harwood suggested the sales tax
· Would shift the tax burden back to Commercial Sector
· Would provide structural balance within the City’s budget in conformance with rating agency criteria
· Replaces Use of One Shots
· Would allow City’s revenues to grow with increased economic activity without raising property taxes.
· Would stabilize future property tax rate increases and offset revenue losses due to certioraris “now and into the future.”
· Would increase the City’s fund balance without raising taxes
Now – with the benefit of these new projections – we can do more.
A 30% Tax Cut!
When these goals were presented to make the case for the sales tax, the Council had no idea the city was so well positioned. Obviously the Mayor was being cautious in not being too optimistic and seeing the sales tax increase and hotel tax as benefits the city was entitled to since other cities had higher sales taxes and most cities have hotel taxes. Perfectly understandable.
However, Happy Days Are Here Again! Sales Tax No Longer Needed.
Based on Ms. Harwood’s projections going out the next three fiscal years now made public, and with the sales tax increase justifiably bringing White Plains equal to Yonkers, Mt. Vernon and New Rochelle, the sales tax increase appears to be no longer needed.
Because White Plains has balanced its budget over the next three years without it.
To wit, this footnote in the budget projections: If revenue enhancements are approved, plan will need to be modified accordingly and bonded (SIC) of tax certs will be eliminated.
However, we ask why have the sales tax increase at all, if it is not needed according to the budget projections?
To Give The Tax Payers Relief.
I answer my own question as the Mayor did Tuesday in print: to give the tax payers relief!
Nuts to providing a budget slush fund to build government!
The Mayor in his wisdom is right: cut taxes, don’t keep them where they are.
What is the Common Council waiting for? Just Do It!
Immediately approving the Mayor’s sales tax increase proposal and tying it to property tax cuts is an election sure thing. Mr. Boykin and Mr. Power and Ms. Lecuona nervous about being elected. Move that half per cent and promise a 30% tax cut.
Not only that but all of us who pay taxes would love a 30% Tax Cut. Wouldn’t you?
Once the sales tax kicked in, its revenues could replace the cut in the tax rate.
If you own a $700,000 home in White Plains you’re paying $9,000 in school taxes and $2,500 city taxes. Your city tax would be cut $730 if the Mayor and Council decreed a 30% tax cut. Should the sales tax windfall be more than the $10 Million the Mayor predicts, he could spread the wealth to cover School Tax Relief, too.
The hotel tax the Mayor has proposed is predicted to bring in $2.5 to $4 Million. This could cut City Taxes even more should the Mayor devote that to cutting taxes too.
It’s a beautiful thing.
The Mayor and Council, should they choose to do so could emerge as America’s bona fide tax-cutting Champs, and the council winding up heroes.
That’s what the city’s projected budgets show they can do. We’re not as bad off as we thought by constructive clever use of debt and revenue trends.
Development will finally pay off big time – every year, with White Plains becoming the place to live, arresting the decline in home prices and making it even more attractive a place to live. Real Estated values will soar!
Delfino to the Rescue of the School District and their Captive Tax Victims.
Other benefits the Mayor and council could use the obviously growing revenue for would be to relieve school taxes by cutting them after the school budget is set. This way the school district would have incentive to cut the budget instead of spending any increase.
The Mayor, of course, should retain control over the amount of the school tax cut. No monies should be turned over to the School District for them to use as they see fit. We know what would happen to them. Instead the Mayor can simply deduct and order tax refunds on the school tax portion of the resident’s tax bill, making sure tax relief is given to the school tax payer.
This would have an excellent effect, we think on the school budget, and the Mayor’s resident tax refunds from half per cent sales tax revenues would make Governor Spitzer’s enhanced STAR refunds look like pocket change.
Of course, the wish list for the revenues to come are many: gang prevention programs for troubled youth which based on the conference I attended yesterday need to build on what the Youth Bureau has started; a new ice rink; and just perhaps, a saner parking fee and enforcement policy.
Now that the Council knows the budget situation – a Windfall Tax Cut as suggested by the Mayor is a “No-Brainer”
What are they waiting for? Armed with these projections, the council should send Adam Bradley up to Albany in a limo tomorrow to introduce this thing.
This is a once in a generation opportunity for an administration to reap the benefits of a dynamic and strategically brilliant financial plan, that is working as we look out to the White Plains future, and to paraphrase Elvis, “Don’t Be Cruel, The future looks bright ahead.Don’t Be Cruel to a Taxpayer That’s Been True. ”
It’s great to live in White Plains!