Overstating revenue can be dangerous as we have seen in the past and as we may very well see again soon, but just as important is how the "anticipated" sales tax revenue is applied to a budget...in this case, it is important to taxpayers in at least one section of the town...those in the Village of New York Mills.
We blogged about it last year and, then Budget Director, Heather Mowat weighed in on the subject:
WEDNESDAY, NOVEMBER 18, 2009Here is the videotape of Ms. Mowat's discussion at the November 18, 2009 town board meeting:
Director of Budget stated that the General Fund total tax increase would be 46.1%. She had conversations with the State Comptroller’s Office and the Town Attorney and the former is not ready to opine on the matter of sales tax-the police department issue-and Village of New York Mills property owners. Ms. Mowat’s recommendation is to leave sales tax where it’s been – in whole town general fund. Go with what seems equitable. She recommended getting a lawyer familiar with writing and reading tax law. The law is not specific and therefore the State Comptroller’s Office declines to opine on the matter. She recommended after speaking with the State C, that even though they said sales tax should go to part town first, that to leave it in whole town so one village does not benefit more than the other. While she would rather have a legal opinion, she would rather be fair…..$1.08 per thousand for New York Mills village property owners.
Tax law is very clear; because villages receive their own share of sales tax revenue, town sales tax revenue must be applied to part town funds first and then to the General Wholetown. See State Comptroller's Opinion 93-27:
Tax Law, §1262(c), as amended by L 1984, ch 850, provides that, if a town and all villages within the town elect to receive their shares of county sales tax in cash, the town shall apply its share to "reduce taxes levied for part-town activities". If any balance remains, the town may apply the remainder for any of the following purposes or any combination thereof: (a) to reduce general town taxes; (b) to reduce county taxes levied in the area of the town outside the villages; or (c) to finance part-town activities. The term "part-town activities" is defined for this purpose to mean, in pertinent part, "(a)ctivities of town government, including highway programs, which are chargeable to the area of the town outside of villages ..." (Tax Law, §1262[f]). "General town taxes" is defined as "[t]axes levied for any town purpose, including highways, upon the entire area of a town". Thus, the reduction of townwide taxes within the area of the town outside of villages is not a purpose under section 1262(c) for which the town may use its cash share of county sales tax when all villages within the town have also elected to receive their shares in cash.Problem is that in New Hartford we have what Ms. Mowat described as an anomaly. We have two villages; one with their own police department and one without their own police department. Question is...can we in all honesty consider the Police Fund a part town fund or not?
According to Ms. Mowat, the State Comptroller did not want to opine on the matter and instead suggested that the town seek legal counsel. Ms. Mowat suggested to err on the side of being fair to all town residents and not use the sales tax to offset police expenditures.
You may ask...It's revenue...what's the difference how you apply it to the town budget?
By applying $689,261 of anticipated sales tax revenue to the New Hartford Part Town Police Fund, the result is four-fold:
1. You hide the fact that the Police expenditures have actually increased by 15% from the previous year because you now have more revenue to offset expenses and therefore you can now show a decrease in the tax rate for part-town police.
2. You make it appear that Police revenue has increased over 300% more than the previous year.
3. Town taxpayers in the Village of NYM will now pay $.86 per thousand of assessed value instead of $.33 per thousand they would pay if the sales tax were applied to the General Whole Town Fund as it always has been.
4. Residents in the Village of New Hartford get the advantage of town sales tax revenue and residents in the Village of New York Mills do not.Not a big deal if you live in the town proper or in the Village of New Hartford, but we suspect the residents in the Village of New York Mills might not be happy paying $.86 per thousand when they could be paying $.33 per thousand!
Town law is also very clear that if a village has a police department with more than four (4) full-time police officers, village residents cannot be taxed for operation and maintenance of the town police department. See State Comptroller Opinion 2003-6.
So, we ask Councilwoman Krupa...$.86 per thousand v. $.33 per thousand...in effect aren't the town residents in the Village of New York Mills subsidizing the New Hartford Police Department if the anticipated sales tax revenue is applied to the Police Budget?
By the way, Councilman Reynolds also took part in that conversation with the State Comptroller. What are your thoughts Councilman Reynolds?
Next question? How were they able to use $689,261 of "anticipated" sales tax revenue in the 2011 Tentative Budget for the police department while at the same time keeping no tax for the Part-town Highway and also providing a decrease in the General Wholetown tax rate? And what happens if we fall short of the "anticipated" sales tax revenue and the Highway expenses [the fund that sales tax is actually suppose to offset before it is applied to any other fund] go up due to a harsh winter?
To be continued...