Cuomo Approves Extension of Local Sales Tax Increases

New York is notorious for its high taxes, and Governor Andrew Cuomo has made the issue one of his top priorities in his first year in office. That has included passing a cap on annual property tax increases and a state budget that closed a $10 billion deficit without raising taxes. He also fought to allow a tax surcharge on wealthy New Yorkers to expire.

But when it comes to sales taxes, Cuomo has allowed county and local governments some latitude. Last week, the governor signed into law a series of bills that will extend until 2014 long-standing sales tax increases in Rockland, Putnam and New Rochelle. Another bill will allow Westchester to continue to distribute sales tax revenue to municipalities and school districts.

State law allows counties to charge up to 3 percent in sales tax, but in the early 1990s lawmakers gave counties the authority to charge 4 percent. Those provisions have been continually extended every two years since. Local officials say the tax is vital to providing services to residences without raising property taxes.

"With budget cuts, all we have left are essential services and losing the sales tax would be devastating," said New Rochelle City Manager Charles Strome.

In New Rochelle, the extra one-percent sales tax is expected to bring in around $9 million in revenue this year, according to a bill memo. Strome said the city expects total sales tax revenue to surpass $23 million this year.

Rockland County is home to the Palisades Mall, which draws in shoppers from across the region. The county expects to reap about $175 million in sales tax receipts in the current fiscal year, thanks in part to the extension of the one-percent increase.

County Board of Legislators Chair Harriet Cornell said most, if not all, of the county's property tax revenue goes to pay for state-mandated programs, particularly Medicaid.

"For many years we have shared sales tax revenue with towns and villages, enabling them to keep their property taxes down," Cornell said.

Westchester also doles out revenue to local governments and school districts, and Cuomo has signed a bill that will continue to allow them to do so. County spokeswoman Donna Greene said in the fourth quarter of 2010 alone, the county collected $112 million in sales tax receipts and distributed $24 million to local governments.

The distribution is all the more important as municipal and school officials brace for the implementation of a measure that will cap annual property tax increases at the lesser of 2 percent or the rate of inflation. Cuomo has said the cap is necessary to rein in skyrocketing property taxes and impose fiscal discipline.

Officials in Putnam did not return calls seeking comment, but in a statement last year former County Executive Robert Bondi said the sales tax extension will bring in $11 million for the county and stave off "double digit property tax increases, significant loss of services, or a combination of both."