YORKTOWN, N.Y. – County Executive George Latimer told a neighboring town board last month that a proposed penny-per-dollar rise in local sales taxes was urgently needed and far better than yet another hike in county property taxes, already among the nation’s highest.
Latimer, going on the road to promote the sales-tax increase, has depicted a county in fiscal crisis. The onetime assemblyman and state senator said he has urged the legislature to approve his sales tax plan for two years as part of Albany’s current budget negotiations.
Asked by Bedford legislators about his proposal’s prospects for passage, Latimer said, “I call it 55-45 we’ll get it: slightly more chance that we’ll get it than not.”
State restrictions on property tax increases and dwindling county cash reserves, Latimer said, were forcing Westchester to find an alternative revenue source to stay afloat financially. Otherwise, he warned Bedford’s board, “Your government and our government will go under.”
For homeowners and local elected officials who might find his sales tax hike—from today’s 7.375 percent to 8.375—a bitter pill to swallow, the county executive offered sweeteners:
For owners of real property, Latimer would freeze county property taxes at their current level for the same two-year life span of the sales tax increase. The legislature would have to take up any renewal of the increase beyond two years.
Latimer also pledged to share with local governments and school districts a new six-figure windfall the proposed sales tax increase is expected to generate. “You don’t have to vote for anything here,” Latimer said. “You sit back, and if this thing passes, you will get more sales tax money to your revenue stream.”
Under the Latimer plan, Westchester stores now charging $7.38 per $100 would go to $8.38—a rise of 13.5 percent.
An increased sales tax would generate some $140 million in new revenue, Latimer estimated. Most of that money—70 percent, or $98 million—would flow to county coffers. But all of Westchester’s towns and villages as well as the cities of Peekskill and Rye would divvy up 20 percent of it, an estimated $28 million, and school districts would split the remaining 10 percent ($14 million).
“I don’t know if our projection of $140 million is rock-solid,” Latimer acknowledged. “It always depends on what’s happening in the sales tax and the economy in general.”
Latimer marked a year in office in January after ousting two-term county executive Rob Astorino in November 2017. Without mentioning his predecessor by name, he faulted the previous administration for what he described as budget balancing through borrowing and reliance on cash reserves.
Latimer called it fiscally “foolish” to repeatedly tap rainy-day money.
“Using reserve funds is like using a savings account to pay your monthly mortgage,” he said. “Sooner or later you run out of savings, no matter how much you have.”
Latimer said some $15 million of the county’s newfound sales tax revenue would go toward building up the reserve fund, restoring it in annual installments from today’s roughly $70 million total to about $170 million.
At a Feb. 14 news conference, Latimer described the county’s current financial situation as a “crisis [that will] only get worse if we don’t take bold action.” At the event and flanking Latimer, a Democrat, a number of elected officials from Westchester towns and villages voiced bipartisan support for his initiative.
A statement released by Latimer’s office quoted some two-dozen local municipal leaders, each discussing how his or her local government’s estimated share of the added sales tax receipts could address pressing needs. The projected local shares ranged from $2.1 million for Greenburgh to $236,000 for the Village of Elmsford.
Sales tax critics generally indict the levy on two counts:
For often putting local merchants at a competitive disadvantage with retailers in neighboring, less-highly taxed jurisdictions; and
For being “regressive,” disproportionately burdening those least able to afford it.
Many merchants, already unhappy with the county’s imposition last year of paid sick leave for small-business employees, appear to have similar misgivings with a sales tax hike.
“Making it costlier to patronize these local businesses with an ill-advised 13.5 percent sales tax increase will help accelerate the number of empty storefronts in Yorktown and elsewhere in the county,” Sergio Esposito, president of the Yorktown Chamber of Commerce, wrote in a letter to the editor. He said “brick-and-mortar” businesses, which are already threatened by online sales, would be further stressed by this increase.
The Yorktown Small Business Association, however, lauded the financial benefits to the county. Bob Giordano, founder and president of the business organization, said he does not believe this would change anybody’s shopping habits.
“Consumers who travel to New Jersey and Connecticut to avoid sales tax will continue to do so,” he said. “It is inconceivable to me to conclude that someone shopping for a $100 item in Yonkers or White Plains will decide to go to Greenburgh or Yorktown to avoid an additional 1 percent sales tax on the same item.”
Latimer agrees, saying studies suggest that people are more inclined to do their shopping where they live unless they’re purchasing some big-ticket item like a car. A 1 percent rise in sales tax, he said, is not likely to change that pattern.
Discussing the supposed regressive nature of a sales tax, Latimer insisted, “It is a consumption tax; you pay based on what you consume.” If the additional sales tax would be a burden, he said, a cost-conscious shopper can always buy an $80 lamp, for example, instead of the $100 one. Moreover, he noted, most of the county’s poor live in its four major cities—Yonkers, Mount Vernon, White Plains and New Rochelle—so they are already paying at least the 8.375 percent in sales tax.
Additional reporting by Brian Marschhauser