Property tax increase blamed on Molinaro
The chairman of the Poughkeepsie Common Council on Saturday said the city is in its current fiscal crisis because Dutchess County Executive Marc Molinaro and the Republican-led county Legislature “have cut the legs out from under the city for years and this fiscal crisis and budget is the consequence of their policies.”
Petsas’ comments come after Mayor Robert Rolison, a Republican and former chairman of the county Legislature, announced his proposed 2017 city budget, which includes a 16.5 percent property tax increase.
The criticism mirrored a complaint about the redistribution of Dutchess County sales tax revenues voiced recently by town of Rhinebeck Supervisor Elizabeth Spinzia.
The distribution formula in Ulster County also was changed this year in a time-pressured negotiation at the insistence of Ulster County Executive Michael Hein, a change that some critics have said shortchanges the city of Kingston.
Petsas acknowledged the new mayor “inherited a fiscal mess,” but the chairman said Rolison “needs to get Dutchess County government to restore Poughkeepsie’s sales tax revenue.”
He said since the sales tax formula change in 2013, Poughkeepsie taxpayers have lost close to $6.8 million through the end of 2015 and that number will grow even larger by the end of this year. “Under the county’s distribution formula, the city of Poughkeepsie’s sales tax revenue is down 17 percent since 2012, while the county’s portion is up 11 percent.”
Petsas said that, since 2012, gross sales tax receipts have gone up six percent, while the county kept an extra $17 million that would have been distributed and shared among all of the municipalities. That, he said, resulted in local distribution being down 12 percent.
“Until Molinaro changes the sales tax agreement with municipalities, any property tax increase for Poughkeepsie in 2017, is the ‘Molinaro property tax increase,” Petsas said.
The Poughkeepsie Common Council will vote Monday evening calling on Rolison and Molinaro to renegotiate the current sales tax formula to “provide greater aid to the city and all municipalities.”
Under state law, counties find it necessary to negotiate a sharing agreement with cities because cities — but not towns or villages — have a right to charge a sales tax of their own, effectively pre-empting a county sales tax within their jurisdiction.
Shortly after taking office in 2012, Molinaro negotiated a new sales tax agreement between the counties and the city of Beacon. The new deal, represented a sea change in the way the county shared its tax revenue with municipalities, setting a base amount of $25 million to be divvied among municipalities plus 18.5 percent of any growth in sales tax. Under the prior agreement, which expired in 2005, the county kept 18.5 percent of all revenue, and the municipalities shared 18.5 percent, with 55 percent of that going to the county’s two cities.
Spinzia last month called the new formula “top down strangulation,” an “unfunded mandate,” and “the most damaging policy ever.”
In Ulster County, newly elected Kingston Mayor Steve Noble, a Democrat, was pressed by Hein, also a Democrat, to accept a complex change in the distribution of sales tax revenue. The five-year deal caps the amount of sales tax the city could receive in the final three years of the deal.
One critic, Kingston Alderwoman Lynn Eckert, DWard 1, said she was “absolutely mystified” by the county’s approach to negotiations. She said the county had not been a good faith negotiating partner and she was concerned how it would act when it came time to implement the shared services. “For me, I think if the city faces any financial stress we have to remember why and we have to hold Ulster County Executive Mike Hein accountable and responsible for that financial stress,” Eckert said.