Red Hook opposes county cap on shared sales taxes

Red Hook’s Town Board adopted its preliminary budget for 2013 while voicing its opposition to the county’s proposal to permanently cap the sales tax revenue shared with the town.

In a resolution unanimously passed at its meeting Nov. 13, the board registered its “serious misgivings about the negative impact on future municipal budget planning were this proposal to go forward.”

County Executive Marc Molinaro has proposed capping the share for municipalities at $25 million, a cut of 15% from 2012, in order to close the county’s budget deficit. The proposal means a reduction of more than $50,000 for Red Hook in 2013 and would impact all municipalities in Dutchess County, including Rhinebeck (an anticipated loss of $51,000) and Milan (an expected loss of more than $20,000).

Supervisor Sue Crane described Red Hook’s position on the plan this way at a board meeting last month: “If we must [accept the cut] this year, we need some assurances. If the sales tax increases from here, the municipalities must share in that increase.”

The resolution focuses on a plan for revenue-sharing after 2013 and said that the town board was concerned that a permanent cap would “hobble” municipal leaders’ efforts to balance annual budgets “if one of the primary sources of operating revenues becomes static.”

To soften the impact on municipalities, the county has offered to take over Board of Elections costs for 2013 and significantly reduce the amounts owed by the towns for elections held in 2011 and 2012. The town board’s resolution demands some assurance that the county will take over these costs on a continuing basis, not as a one-time deal.

The town board’s adoption of its preliminary budget for 2013 means that an owner of a home valued at $280,000 would see an increase of $3 if the property is in the village and increase of $29 if the property is in the town. Despite revenue challenges, the budget stays within the state-mandated tax cap with a levy increase of 2.43 percent.

The Red Hook tax revenue resolution follows two similar ones passed in Rhinebeck recently opposing the proposed county budget changes. While the Rhinebeck resolutions rejected the plan, Red Hook’s resolution accepts the cut in taxes but requests a more equitable sharing plan for the future.

Red Hook’s county legislator Ben Traudt, who will be voting on the county budget, agreed with the resolution’s approach. “I don’t think it’s unreasonable, I’d be supportive of a mechanism like that,” he said, referring to the idea that the county would share future increases in revenue with municipalities. “It’s all based on revenue. If [the county] takes in increases, there’s no reason [Red Hook] shouldn’t see more.”

County sales tax revenues, and the amount shared with municipalities, have always risen and fallen with the economy.

A vote on the Dutchess County budget is expected by mid-December.

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