The City’s current sales tax rate of 2.5% must be re-authorized by the State legislature every two years. For more than a decade, the State has coupled our local sales tax authority with a mandated limit on the City’s property tax rate, the so-called “tax cap.” While the cap is appealing in concept, municipal finance experts and bond rating agencies agree that it imperils the City’s long-term fiscal stability, while failing to benefit taxpayers. Of the sixty-six municipalities and counties receiving a State-approved sales tax rate, New Rochelle is the only entity with any restrictions attached.
Last month, the City Manager and Council majority wrote to our State delegation to request extension of our current sales tax rate without any related conditions. The texts of both letters follow. Of particular note is the Council’s commitment to phase-out the residential refuse fee.
Text of City Manager Strome’s Letter to New Rochelle’s State Legislators
It is respectfully requested that legislation be introduced and adopted to extend the additional one percent sales tax authorization for the City of New Rochelle, beginning January 1, 2006, without any conditions or restrictions. Since first enacted twelve years ago, biennial State legislation authorizing the City to impose an additional one percent (1%) sales and compensating use tax has been conditioned upon a restriction on our ability to increase property taxes by no more than the increase in the Consumer Price Index (CPI). The present legislation sunsets on December 31, 2005.
Of the 66 taxing authorities in New York State imposing a local sales tax rate in excess of statutory provisions (see Attachment A), New Rochelle is the only one to have its increase encumbered by State legislation. In fact, there have been 50 separate occasions since New Rochelle’s initial tax increase where the State Legislature has authorized rate increases for other jurisdictions without any conditions or restrictions, including the State’s own sales tax increase in 2003 (see Attachment B).
We are confident that any thorough examination of recent New Rochelle budgets will demonstrate that the City manages its finances responsibly. A comparative staffing analysis shows that New Rochelle maintains a far leaner government than our sister cities in Westchester (See Attachment C.) In addition, our Finance Department has received the Certificate of Achievement for Excellence in Financial Reporting from the national Government Finance Officers Association for the past 17 years.
This treatment applied solely to New Rochelle has been detrimental to local taxpayers. It is almost impossible to plan effectively for the long-term fiscal health of the City with our major revenue source restricted. Services have been reduced, infrastructure improvements have been deferred and fees have been imposed to produce annually balanced budgets. Moreover, the rating agencies have cited the tax cap as the primary factor jeopardizing our credit position, which could lead to higher interest costs.
Your consideration of this request is appreciated. I am available to discuss this topic further at your convenience.
Text of the City Council’s Letter to New Rochelle State Legislators
Signed by Mayor Idoni, Council Members Bramson, Lopez, Quinlan, Stowe & Sussman
We join City Manager Strome’s call for the reauthorization of New Rochelle’s sales tax rate and for the concurrent elimination of the unique, State-imposed constraints on the City’s budgeting authority.
We recognize that some residents may be concerned about the impact of any change in policy on their personal finances or quality of life. Should the Legislature act favorably on the City Manager’s request, we will work to address these concerns directly by undertaking the following course of action:
First, we will eliminate the residential refuse fee, beginning with a reduction in 2006, and with additional reductions to follow every subsequent year, until the fee is phased out entirely. The residential refuse fee was adopted reluctantly by the Council in 2003 only because of the tax cap. With this limitation removed, we are confident that the fee can be phased out.
Second, we will continue to strive to keep the City tax rate as low as possible, consistent with sound fiscal management, preservation of essential services, and investment in community priorities. To that end, we will invite the public, as we have in the past, to participate in the development of City budgets for 2006, 2007, and beyond. While our budgets have always been constructed with public oversight and input, we will encourage citizens to participate more fully in the months and years ahead.
Third, we will continue to study the budgets of other New York State municipalities with demographics, services, and economic challenges similar to those of New Rochelle in order to ensure that changes in our local tax rate are consistent with or lower than prevailing trends. Such an exercise will provide useful comparative examples for local taxpayers seeking to measure the efficiency of their government.
Fourth, we will continue our aggressive pursuit of well-planned economic development to help relieve the tax burden on homeowners. Successful development in the past decade has roughly doubled New Rochelle’s sales tax receipts, while also stabilizing our local property tax assessment base. With several new major projects now unfolding, including Avalon Phase II, Church-Division, the New Roc Tower at Parcel 1A, and Echo Bay, there is good reason for optimism about our local economy.
Fifth and finally, we will continue to work with our State delegation to secure additional State aid. Through your effective advocacy as our Assembly and Senate representatives, you secured an aid increase for New Rochelle of more than $600,000 this year alone. We aim to strengthen further our partnership to deliver the full and equitable aid package New Rochelle’s taxpayers deserve.
In sum, these steps reflect our deep and personal recognition of the financial burdens borne by so many residents, and our determination to use every appropriate and responsible means to control the growth of taxes and fees. As individual elected officials representing diverse constituencies, we bring different views to the City Council. We are firmly united, however, in the belief that New Rochelle’s citizens deserve the right to make choices and set priorities for themselves, without outside control, just like the citizens of every other municipality receiving a State-authorized sales tax.
We appreciate your thoughtful consideration and your commitment to the economic stability of New Rochelle, and ask each of you for the introduction, support and enactment of the legislation necessary to extend the sales tax rate for the coming two-year period.