Village agrees to inquiry into city’s budget practices

The period of relative calm and apparent harmony between members of New Paltz’s two elected councils appears to be coming to an end, with administrators signing a memo suggesting an investigation into the city’s budget practices might be an appropriate next step. This was in response to council members linking a decision to unilaterally end a sales tax sharing agreement to why city property taxes should be raised by 5.63% for 2023.

Sales tax is, under state law, shared only with county and city governments. The fact that three percent of the local share is distributed to other municipalities in this county is essentially a form of largesse, since no law requires it. This agreement, between county and Kingston officials, was supplemented in New Paltz by another agreement, recently reaffirmed in 2017. In this joint resolution, it was emphasized that even if more than 5% of the sales tax in county is collected in New Paltz, less than one-tenth of one percent of the county’s total is returned to the community. The resolution sets forth the understanding that New Paltz’s entire sales tax share, however small, would be used for citywide expenses; other clauses establish that this should be reviewed before 2019, and “that in the event that no further action is taken with respect to this resolution, it will continue until another policy of tax revenue sharing be adopted”.

In July, an “Alternative Tax Revenue Sharing Policy” was adopted unilaterally by village administrators. Concretely, they chose to take the village portion directly. There was no public debate about the decision when it was made. When city council members began discussing the 2023 budget on Oct. 20, the framing was that if the new budget doesn’t come within the tax cap, it’s because of the end of this long-standing practice. . This is because in a city with a village within it, municipal taxes must be divided into two funds, to account for the fact that some municipal services are not needed within the village boundaries. For example, the inhabitants of the village do not pay for the snow removal of the roads of the city, because they pay village taxes for the snow removal of the roads of the village. Sales tax will now be apportioned based on the percentage of estimated land value inside the village, and city officials believe that means it can only be used to pay for expenses. outside from the village.

Mayor Tim Rogers takes a different view, which is reflected in the memo signed by the trustees at their Oct. 26 meeting. The mayor’s reading of the law is that the way that money is distributed in Saugerties is perfectly acceptable. As explained in the memo, most sales tax funds sent to the city can be used citywide. In the Rogers example, if next year’s New Paltz share is $250,000 and $57,500 is taken for village purposes – based on the shared value of the assessment – that would leave 192 $500 for all others. “It would be expected” that $57,500 would be transferred to fund B to “support services in the city”, leaving $135,000 that could be kept in fund A citywide.

Supervisor Neil Bettez isn’t convinced the law makes this possible, but admits it is. If that were the case – which the city’s external auditor believes to be untrue – this election should have been made before September 1. Failing that, the supervisor sees this as one of the many budget challenges this year. This will not be a problem in the future, but others, such as rising pension and health care costs, are on the way.

Village officials also questioned the calculations, questioning why the draft budget shows $94,000 in sales tax revenue, all in fund B. Adding that to the $57,500 that village officials expect to receive, this comes to $151,500, well below the $250,000 in the 2022 city budget. There is also mention that $319,800 was actually received in 2021. The reason for the high number is that the This year’s revenue exceeded the county’s budget forecast, which for the first time triggered a relatively new clause in the city-county agreement that called for a conversation about how to share that bounty. The county executive and city mayor chose to share four percent of what happened that year with local municipalities, instead of three. Nonetheless, the question that came up at the October 26 meeting is why even the most conservative $100,000 doesn’t show up in the city budget.

Reached later, Bettez said the budget numbers are the best estimate of what to expect, and that those numbers show a belief that the banner sales tax year of 2021 is unlikely to repeat itself anytime soon. given the economic headwinds in this country. Part of the text of state tax law §1262 reads: “Where a village has elected to be paid directly as provided in this subdivision, the amount to be paid to such village shall be determined by the ratio between the full valuation of the real estate in the village or the part of it inside the city in which this village is located leads to the full valuation of the real estate of the whole city. located within a city has so elected to be paid directly, but the city in which such village is located has not elected to do so, the amount allocated to the city in which such village is entirely or partially located shall be applied to reduce county taxes and general city taxes in the area of ​​the city outside such village or villages.”

This is the basis of the position that the money should go into fund B, which as it is structured now really doesn’t need anything more. In Saugerties, the Town Court is remunerated from Fund B as there is a Village Court, and in Ellenville there is both a Village Court and a Village Police Department. Transferring police costs to fund B, for example, would mean that they no longer patrol the village; no city official has been recorded to suggest this or a similar approach.

Rogers emailed board members asking for their arithmetic and also invited a joint meeting to discuss the matter. The issue of joint meetings was the first public crack in the unity displayed with these two councils. When Rogers and Bettez took office, bi-monthly joint meetings were agreed upon, but the board members eventually announced that they really only wanted to meet when there was something on the agenda that required discussion. action of the members of the two councils. This specific invitation was rejected, implying that it should have been discussed before the decision was made in July. No specific calculations were provided either.

Administrators expressed frustration with what Rogers called a “misinformation campaign” about how city finances work and the impacts of the decision. They pointed to the fact that some council members talked about the benefit of having water revenue, despite the fact that this money also needs to be separated. Dan Torres explained after the city council meeting that this was part of a “holistic” visualization of budgets. It may be perfectly legitimate to blur this accounting line when, for example, public works employees repair a main water leak and pay these overtime hours out of water revenues.

By contrast, Bettez has expressed a preference for having private discussions rather than making it the center of ongoing, very public debate. “It’s about winning the argument, not solving the problem.”

Alex Wojcik, the deputy mayor, thinks it would be worth the state comptroller taking a look to make sure this village approach is “above the board”. However, the wording of the memo is that administrators “believe” state officials might want to review the city’s next budget and last city council meeting, suggesting that’s the behavior of state officials. the city that should be examined. Rogers has since claimed that the memo was only distributed to city and town officials, and also forwarded to the Saugerties supervisor and this reporter.