Collections down 24 percent in May
The Putnam County Legislature voted last week to extend a 1 percent sales tax on goods and services purchased in the county, which lawmakers say generates between $12 million and $15 million annually.
The vote came after Finance Commissioner Bill Carlin told legislators that the economic shutdown caused by the COVID-19 pandemic will leave the county with a substantial shortfall.
Since 2007, the state has given counties the option to impose an additional 1 percent sales tax. The Putnam legislature has repeatedly opted to extend this added tax, which will now be in effect through November 2023.
Putnam residents pay 8.375 percent sales tax, which is made up of 4 percent in state tax and 3 percent in county tax, plus the 1 percent additional tax and 3/8 of a percent for the Metropolitan Commuter Transportation District.
During the county’s June 2 Finance Committee meeting, Carlin explained that, as of May, the county had received $3.5 million in sales tax revenue, a decrease of $1.1 million, or 24 percent, from May 2019. As a result, the expected 2020 surplus has fallen to $544,500 from $1.5 million in the first quarter of the year.
Carlin said the county budgeted for $64.4 million in sales tax revenue in 2020, which is less than it received in 2019 ($66.3 million).
“We’ve always had a history of conservative budgeting practices, so that will bode well for us,” he said. “But there still will be an economic effect — it will be a bad one. And the longer the economy stays closed and limited, the higher the ultimate sales tax shortfall will be for the county.”
During the full Legislature meeting that followed the Finance Committee meeting, lawmakers voted 8-1 to extend the additional 1 percent sales tax.
Legislator Joseph Castellano (R-Brewster) called it a “necessary evil,” saying it is a fair way to spread the tax burden on everyone who visits and spends money in the county.
“If not for that 1 percent, we would have to pass that $15 million back onto the property owners of Putnam County,” he said.
Legislator Paul Jonke (R-Southeast) who since 1988 has served as an assessor in various towns within the county, explained that Putnam’s total tax levy each year is about $40 million, and if the $12 million to $15 million from the additional sales tax were not generated, the county would have to raise property taxes by about 30 percent, or make major cuts to the budget, to make ends meet.
Legislator Nancy Montgomery (D-Philipstown), who was the lone “no” vote, did not agree.
“We could find that in the property taxes or we could cut the fat in the budget, and that’s what would be most fiduciarily responsible on our part,” she said.
Montgomery asked to see data on who is paying the sales tax. If the revenue is mostly coming from tourists, she said, they are likely spending their money in the western side of the county.
While she said Philipstown can see anywhere from 6,000 to 10,000 people passing through while visiting the Hudson Valley on “any given nice weekend,” she questioned how many visitors or tourists the county as a whole is getting.
“I don’t know that that many people are vising Carmel and Patterson, but I know there is the constant claim and concern from my constituents in District 1 that we’re not seeing any of that sales tax back in my district,” said Montgomery.
However, Legislator Amy Sayegh (R-Mahopac Falls) said there are plenty of transients who spend money in Putnam.
“People going through our county are going to stop and get gas at our gas stations and they are going to help with the burden of this tax to our Putnam County homeowners,” she said.
“A vote ‘no’ on this means your local property tax will be increased significantly, or massive cuts to the Putnam County budget,” added Castellano, before the measure was passed.