WPCNR CITY HALL BLUES. By John F. Bailey. September 21, 2004, Updated 12:17 P.M. E.D.T.: The Council of Neighborhood Associations invited newly minted Councilperson Larry Delgado to address issues with them last week at Education House. In the course of that evening last week, Mr. Delgado reported that the city Finance and Budget departments were going to attempt to get financial data on the pace of sales tax collections in a more timely, more accurate manner from the New York State Department of Taxation and Finance and the Comptroller’s Office to prevent the budget trauma of last year.
MAYOR JOSEPH DELFINO ON MISSION TO GET ACCURATE SALES TAX REPORTING FROM ALBANY ON SALES TAXES. Photo by WPCNR News.
Councilman Larry Delgado, (CENTER), with, L to R, Robert Levine, Lisa Tarricone of The White Plains Watch, Mr. Delgado, and Judith Higgins, in speaking to the Council of Neighborhood Associations said he found it hard to believe with the business being done in the downtown that our sales tax figures were not running way ahead of last year at this time. Delgado said White Plains collected over $38 Million in sales tax for fiscal 2003-04. Speaking to WPCNR at the Sculpture Garden Opening, Budget Director Anne Reasoner confirmed that. Photo by WPCNR News.
PAUL WOOD, ACTING EXECUTIVE OFFICER of the City of White Plains, expressed concern on the sporadic reporting of sales tax figures, and announced the Mayor’s new initiative to Albany at the Sculpture Garden opening at the Library last Wednesday. Photo by WPCNR News.
Last Wednesday the sun-bronzed Paul Wood, the Acting Executive Officer for Mayor Delfino, confirmed that the city was going to attempt to get the sales tax numbers “in real time.” He reported that Mayor Joseph Delfino will be going to Albany in October, (no date set), to discuss what can be done to get real numbers on what the city earns from sales tax each month.
“Now they just give us estimates based on last year, “ Wood told WPCNR. He said that the city needed timely figures, “in real time” based on actual receipts, not estimates. He said the Mayor was going to discuss the possibilities of the state instituting timely, actual coin-in-the-till-as-of-this-moment reporting to the city.
Tom Roach, Common Council President, told WPCNR last week, he, too, was “all in favor of more (financial) reporting, the more information, the more timely, the better,” he said, and added that he had spoken to New York State District 89 Assemblyman Adam Bradley about it, that that Mr. Bradley indicated he would aid in the White Plains quest for more key numbers, more often, to improve financial planning.
Still Using Green Eyeshades and Ledgers?
As an example of the confusion the “Green Eyeshade Reporting” (in the age of the number-crunching computer), now used by the state to report the numbers to the state’s cities, there is a tendency on the part of responsible city governments to overcompensate if the numbers estimates from Albany look low.
This is what White Plains did last year in its budget process. For example, if the city had known they were going to get an estimated $10 Million in sales tax in the last quarter of 2003-2004,(April, May, June) or were in a better financial position on actual sales tax receipts in March than they thought they were, the Common Council might have trimmed its property tax increase slightly, or bonded for a million less.
Still No Numbers Three Months Later.
The footdragging among Albany Eyeshaders kills the ability of cities to plan finance responsibly for the next year, or at least gives them a good excuse to extra more taxes from their citizens and businesses.
The $10 Million (About $3.35 Million a month in April, May, and June, 2004) of sales tax revenue White Plains got (we think) in the last quarter of 2003-04 is a WPNCR estimate as to what the city actually raked in sales tax in the final quarter because that was the gap the city was facing, again based on estimates of sales trends as last year played out based on city hall figures.
Financial Ballparking
WPCNR estimated that the city was at $28 Million in Sales Tax revenues at the end of three quarters, based on the figures the city provided at the end of March. This meant the city needed $10 Million over April May and June to make their budgeted sales tax revenues for 2004-05 of $37 Million, or about $3 Million and change a month in April, May, June. They got it.
Meanwhile, Budget Director Anne Reasoner told WPCNR at the Sculpture Garden opening last week that the city still has not closed the books on 2003-04, and has no handle on the newest sales tax figures for the first two months of 2004-05 (July & August, 2004). She said the city would be reporting the figures on the budget in about the middle of October.
Something the U.S. Government Does that New York State Cannot?
Considering that the United States Government reports job figures nationally every month, as well as price information (Consumer Price Index), it would seem that the New York State Comptroller’s Office and the Department of Taxation and Finance could do the same thing. If they can’t, why can’t they? If they can, why don’t they? Maybe they are making a lot of mistakes in rechanneling sales tax back to the cities? That’s what hopefully Mayor Delfino and the rest of the New York Conference of Mayors will be able to find out when they meet next month.
Earl Skeptical In Her Last Days.
EILEEN EARL, FORMER CITY BUDGET DIRECTOR, NOW A CONSULTANT AS SHE APPEARED BEFORE THE COMMON COUNCIL, JANUARY, 2003. Photo, WPCNR News Archive.
On January 26, 2003, WPCNR published an article revealing that other budget directors agreed with Ms. Earl’s skepticism that Albany is not splitting the take correctly.
Here is an excerpt from that article:
In January, 2003, just before she left her post, former Budget Director Eileen Earl at a Council Work Session on the budget , said she did not believe White Plains was getting the right amount of sales tax back it was due. She revealed that the state does not send White Plains an audit of sales tax receipts Budget Directors in New Rochelle and Yonkers went on record with WPCNR questioning the sales tax receipts the state sends back to their cities.
What Ms. Earl said about the state not sending the city an audit interested the CitizeNetReporter. I talked with Howard Rattner, Financial Manager of New Rochelle. He confirmed to us that the state never sends New Rochelle any kind of audit. He said he has asked the Department of Taxation and Finance for reports on how much revenue different business groups in his city generate to New Rochelle, and has been told “they don’t have the ability to do that.” Rattner wryly said that in this age of computers this was hard to believe.
Asked if the state was sending New Rochelle its fair share of sales tax, Mr. Rattner, said “Supposedly.” He said there are “occasional period adjustments. No real projections (from the state). You (as Budget Director) get projections (from the state). You (as Budget Director) have little control over that. How they distribute (the sales tax revenue) is up to them.”
Yonkers Budget Director, James LaPerche, confirmed that Yonkers did not receive detailed audits from the Department of Taxation and Finance either, saying, “he just accepts the checks as they come in.” LaPerche said the Department of Taxation and Finance was not too responsive to requests. They don’t really respond to him, was what he said. Asked if Yonkers felt the sales taxes were being redistributed correctly, LaPerche said, according to Hezi Aris of The Yonkers Tribune, who interviewed him,” they don’t know, they assume that’s their share.”
Cash First. Count Later.
There’s a reason for that.
WPCNR learned that sales tax receipts are not collected and recorded to a city’s or county’s account on a real time basis by the Department of Taxation and Finance, such as credit card sales in the consumer sector are.
Sales tax receipts are sent weekly by businesses to the Department of Taxation and Finance, but not reconciled until actual returns are filed quarterly. This creates an artificial “float,” a “cash gap” between estimated sales tax receipts and actual receipts due the municipalities. According to our sources it can take about six months while Department of T & F personnel literally “eyeball” the sales tax returns. As the budget directors we talked to, explained it:
The Process
Rattner of New Rochelle said that the sales taxes are collected by the businesses in the state, and filed directly with the Department of Taxation and Finance. Cuneo-Harwood of White Plains added that the sales tax receipts are sent directly by businesses weekly to the State, but their tax returns are filed quarterly.
It is only when the Department of Taxation and Finance receives the businesses’ tax returns that they reconcile and determine actual sales tax amounts collected for a city such as White Plains for a specific period. A city or said there are “occasional period adjustments. No real municipality with its own tax jurisdiction such as New Rochelle, Rattner said, has the sales broken out and sent to the state in the return.
No “W-2’s” for Businesses.
Jurisdictions, WPCNR learned, are determined based on reading the addresses on the returns. Rattner said businesses do not file the equivalent of a “W-2” or copy of return to the cities or towns where they do business and collect the sales tax.
Consequently, it appears, the only budget tool any city or town has as to what they can count on in sales tax receipts is the amount sent to them last year. The state simply returns last year’s collections, and adjusts on a quarter to quarter basis, after they check returns.
Westchester County, too has no handle on “their handle.”
Donna Green, a spokesperson for the Westchester County Department of Communications, confirmed that Westchester County does not receive a state audit, town-by-town, city-by-city, as to what “handle” (Race Track parlance for total monies bet on a single day), Westchester generates from year to year, either by business type, or business location.
She said the county receives a lump sum payment for the county tax, then distributes the share to the towns for which it collects by a percentage based on the town and city individual tax rate. The cities of Mount Vernon, New Rochelle, White Plains and Yonkers receive their payments from the state directly because they are separate tax jurisdictions.
The county can only assume they will receive approximately the same sales tax as the previous year, and more if the economy turns up, or such as may be the case this year, turns down. The county then apportions the receipts to cities, towns, and municipalities, who of course, have to trust the county’s formula after taking the county takes their share. They have to trust the county because there is no return filed by municipality for individual businesses collecting sales tax.
Eyeshades and Paper?
The state appears to be collecting sales taxes the way they have always collected them. There are no “real time” transactions, no instant classifying of sales tax revenue collected by county or municipality, which is baffling in the age of electronic banking, internet sales, and computerized business operations, and international money transfers.
The fiasco of the loosey-goosey sales tax reporting to the City of White Plains last year underlines the need for monthly actual figures reporting of sales tax receipts for the city, and a full state audit of the sales tax collected, city-by-city, county-by-county, across the state every year.
No State Self-Audit.
According to the city budget people we spoke to in Yonkers and New Rochelle, the state does not audit itself on the sales tax collections. The New Rochelle Budget Manager at the time said he has asked the state Department of Taxation and Finance for breakdowns of sales tax collected by business type, such as sales tax from auto dealerships, retail stores, restaurants, and the state has told him they cannot provide that.
Mayor Delfino’s visit to the Eyeshades next month perhaps will start a process where budgeting might be more orderly and intelligent in White Plains than the process the city indulged in last year in which they dissolved the Parking Authority, bonded for rolling stock, and raised property taxes, forced to make budget fixes based on sales tax reporting from the state that needed to be more timely.
