Authorizes the city of White Plains to impose an additional one-quarter of one percent sales and compensating use tax

BILL NUMBER:A9966A

Title of bill

An act to amend the tax law, in relation to authorizing the city of White Plains to impose an additional one-quarter of one percent rate of sales and compensating use tax

Purpose

For the period beginning June 1, 2010 and ending August 31, 2011, this act authorizes the imposition of an additional one-quarter of one percent rate of sales and compensating use tax by the city of White Plains.

Summary of provisions

Section 1 of the bill states that clause 3 of subparagraph (ii) of the opening paragraph of section 1210 of the tax law, as amended by chapter 37 of the laws of 2009, is amended to authorize the city of White Plains to impose, from June 1, 2010 until August 31, 2011, an additional one quarter of one percent rate of sales tax.

Sections 2-4 of the bill provide technical changes to sections 1210, 1223 and 1224, respectively, of the tax law that reflect the authori- zation of the city of White Plains to impose an additional one-quarter of one percent rate of sales tax.

Section 6 of the bill requires the city of White Plains to pay the esti- mated revenue from the additional one-quarter of one percent rate of sales tax into the city's contingency and tax stabilization reserve fund, subject to all the limitations and other provisions of section 6-e of the general municipal law.

Section 7 provides the effective date, which is immediate.

Existing law

This bill authorizes the city of White Plains to impose an additional one-quarter of one percent rate of sales and compensating use tax on the current law for the period beginning June 1, 2010 and ending August 31, 2011.

Justification

Legislation enacted in 1993 authorized the city of White Plains to impose an additional one-half of one percent rate of sales tax. That law was extended for successive two-year periods from 1995 through August 31, 2009. In addition, legislation enacted in 2008 authorized the city of White Plains to impose an additional one-quarter of one percent rate of sales tax through August 31, 2009. In 2009, each of these laws was extended for an additional two year period ending August 31, 2011.

This bill will permit the city of White Plains to impose an additional one-quarter of one percent rate of sales tax for the period beginning June 1, 2010 and ending August 31, 2011. Given the sharp, unexpected

downturn, in the local economy, sales tax revenues have declined substantially since the last one-quarter of one percent rate of sales tax increase was enacted in 2008. Since then, the city has depleted almost all of its fund balance. Under the proposed legislation, the city will be required to pay the proceeds of the rate increase into a contin- gency and tax stabilization reserve fund, under section 6-e of the general municipal law, which will assist the city in replenishing its depleted fund balance. Accordingly, upon being paid into the reserve fund, the proceeds of the rate increase can only be used upon the approval of a super majority of the city's common council and have to be applied to an unanticipated revenue loss, an unanticipated expenditure or to lessen or prevent certain projected increases in the amount of the city's real property tax levy. Thus, safeguards are built into the rate increase to ensure that the proceeds of the increase are applied prudently.

This bill will not affect the sales tax revenue of Westchester County.

Legislative history

None.

Fiscal implications

None to the State.

Effective date

Immediately.