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WPCNR QUILL & EYESHADE By John F. Bailey. April 7, 2010 UPDATED 4:28 P.M. E.D.T.: If last year’s sales tax collection pace in March, April, May, and June is duplicated, the city will still come in $500,000 short of the predicted $43.5 million in sales tax plugged into the new city budget released Monday. If sales tax continues at is present pace of decline (8%), the city will miss it by $1.6 Million.
Meeting, or beating last year’s March, April, May and June sales tax receipts paces would be most welcome, and would show a “recovery in White Plains retail” was on the way.
It would be a significant reversal of the sales tax trend since July, which has seen sales tax decline in 7 of the first 8 months of the city fiscal year a consistent decline rate of 8%, though it has slowed from the 11% had been running.
Presently the city has collected $29,087,681 in sales tax through February. If they collect the $13,897,662 the city received last year in March, April, May and June they will collect $42,985,342 a half million short of the projection in the budget released Monday, $43.5 Million.
If the present rate of decline in the sales tax (8%) continues to be reflected in March, April, May and June figures, this would mean a decline of $1,111,812 creating a final sales tax for 2009-10 of $41,873,530, or a $1,626,470 short of the prediction.
More Tax Increases? More Cuts? Cross Your Fingers
A solution for this untidy gap if it materializes, might require an additional tax hike of 3.7% to close the gap outright, raising the present 19% proposed tax hike to 22.7% (23%). Mr. Genito said Monday that 1% in the tax rate is equal to $440,000 of expenditures. Genito said that if the sales tax declines, a combination of cuts or higher tax increase would have to be considered to keep the tax rate where it is.
1/4% Sales Tax Increase Off the Table.
Mayor Adam Bradley encountered at a public service announcement taping at Saxon Woods Pool yesterday for the March of Dimes Baby Walk, was asked by WPCNR if he would consider dedicating the ¼% sales tax increase he is seeking from the legislature to the 2010-11 budget fund to supplement the general revenues and perhaps lower the tax increase projected by his budget substantially.
Bradley said he is calling for the ¼% tax increase to preserve the city bond rating and to rebuild fund balance, a cornerstone of bringing the city back to sound financial principles, he feels.
Bradley indicated pouring the additional ¼% sales tax increase into the general fund was “off the table.”
Mr.Genito, the Budget Director/Commissioner of Finance had advised reporters Monday the ¼% is worth about $5 to6 Million in additional revenues for the city if the legislature passes it.
WPCNR figures diverting the ¼% sales tax increase out of fund balance, should the city receive the increase, to the general fund would lower the required tax increase to a more manageable 6%, only $163/$1,000 of assessed valuation instead of the $187/ $1,000 of assessed valuation, called for in the budget.
Your fund balance or your bond rating or your tax bill.
However, the city faces a dilemma. Mr. Genito, advised media in a statement by e-mail, that, “At the end of fiscal 2010 (June 30, 2010) we estimate that total fund balance will be approximately $11 million, with $2.1 Million reserved,$5 Million appropriated for the 2010-11 budget,$2.4 Million designated for tax certiorari, leaving $1.5 million as undesignated.
The 2011 proposed budget provides that at the end of fiscal 2011, $2.1 million will be reserved,$1.5 million appropriated for the fiscal 2012 budget, $2.4 million for tax certs, $4.9 million in the tax stabilization fund (remember this is subject to passage of the ¼% increase in sales tax rate), and $5.9 million as undesignated.”
Mr. Genito explained to WPCNR that the$5.9 million in undesignated fund balance he says going to 2012 would be from cost savings in the newbudget year. In an e-mail, Mr. Genito explained:
Given the above, the $5.9M forecast for undesignated is separate and distinct from the $4.9M for tax stabilization. The $4.9M is not included in the $5.9M. The $5.9M is a forecast of what our net revenues might be over expenditures, assuming improved financial management and an improved economy.
The choice Mr. Bradley and the council faces, WPCNR notes is to restore fund balance, revenue has to be diverted, but to do so would mean substantial city cuts or historically high tax increases.
April 12 Looms.
Perhaps good news showing an increase in sales tax for March will be forthcoming on Monday when the New York State Department of Taxation and Finance issues the figures.