Carmel set to benefit as county reaches sales tax sharing deal

CARMEL, N.Y. — The Town of Carmel stands to be one of the biggest beneficiaries of a sales-tax sharing plan approved by the County Legislature on Monday night (May 19). The compromise between the lawmakers and County Executive Kevin Byrne ends a dispute that could potentially have cost the county millions in sales tax revenue.

It all began last month when the County Legislature passed a measure to lower the sales tax rate from 4 percent to 3.75 percent. Byrne vetoed the legislation and instead teamed with the county’s six supervisors and three mayors on a plan that would keep the sales tax where it is and share some of that revenue with the municipalities. The clock was ticking for the two branches of county government to reach an agreement before state lawmakers closed up shop for the summer.

In a press release, Byrne said the tax relief will help communities where they need it most.

"Today we entered into a historic compromise with our towns and villages and paved the way for the largest property tax cut in Putnam County’s history," Byrne said in the release. "With the passage of today’s resolution by the County Legislature, the final legislative product is one step closer to completion and with it a first-of-its-kind sales-tax-sharing arrangement to deliver tax relief where it matters."

Byrne had estimated that cutting the sales tax by 0.25 percent, as the legislature proposed, would have cost the county roughly $5.3 million in annual revenue. Byrne’s plan will keep the tax rate at 4 percent and then share a little more than $2 million of the $85 million the county typically collects annually. The shared funds must be used for public projects such as local infrastructure and capital needs, not for payroll or general operating expenses. 

Each municipality’s share will be based on its population. Carmel, the largest town in the county, could receive as much as $900,000 in sales tax revenue, according to Carmel Supervisor Mike Cazzari.

Local state representatives have already crafted a bill that will implement Byrne’s revenue-sharing plan, but the County Legislature needed to endorse that bill before Albany could act on it. If it hadn't gotten to Albany in time, the sales tax rate would have automatically dropped to the default amount of 3 percent, which would have cost the county even more money.

Byrne said before the vote that the county would have had to make up that lost revenue somewhere, most likely by increasing the property tax rate—something he adamantly opposes.

Last month, the County Legislature voted 5-4 to drop the sales tax rate from 4 to 3.75 percent. Byrne vetoed that measure and instead proposed the revenue-sharing compromise. It passed on Monday by a vote of 7-1. Legislator Paul Jonke was the only no vote; Dan Birmingham abstained.

In his press statement announcing the plan's passage, Byrne acknowledged the County Legislature's willingness to compromise.

"While I understand this compromise may not have been everyone’s first choice, it was the best choice before us," he said. "The alternative was allowing the county’s sales tax rate to drop, immediately creating a revenue shortfall of tens of millions of dollars. Fortunately, these challenges have been averted thanks to the passage of last night’s resolution. I extend my sincere gratitude to Legislative Chair Amy Sayegh, and all those who supported this measure."

Byrne said he worked with local municipal leaders to craft his revenue-sharing plan—something the local governments have sought for years.

As previously reported, the  Carmel Town Board passed a resolution at its May 7 meeting urging the County Legislature to adopt the sales tax revenue-sharing plan.

“The Town of Carmel shall take whatever action necessary to support and effectuate the county executive’s proposed sales tax sharing at one-ninth of 1 percent, to be allocated to the towns/villages according to population with every town and village to receive a minimum of $50,000,” the resolution reads in part. “The Town of Carmel shall take whatever action necessary to support the county extending the 1 percent sales tax rate, and be it further resolved that the Town of Carmel urges the Putnam County Legislature to call a special meeting to consider and adopt the resolutions proposed by the county executive in conjunction with the towns and villages of Putnam County.”

Byrne praised local governments as well as the Legislature and state lawmakers for working together.

“This is an occasion to show our thanks and gratitude to those who stepped up to assist in achieving this historic accomplishment,” he said. “It also shows that we can accomplish great things when we put the people of this county first and work together to improve the quality of life for all who call Putnam County home.”