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

Summary of provisions

Section 1 amends clause 3 of subparagraph (ii) of the opening paragraph of section 1210 of the tax law, as amended by chapter 74 of the laws of 2010, by further authorizing the city of White Plains to impose the specified taxes at a rate which is (i) one-half of one percent addi- tional to the three percent rate authorized in this paragraph for such city for an additional two year period ending August 31, 2015 and (ii) an additional one-quarter of one percent in addition to the other rates authorized in this paragraph for such city for an additional two year period ending August 31, 2015; and (iii) an additional one-quarter of one percent in addition to the other rates authorized in this paragraph for such city for the period ending August 31, 2015.

Section 2 provides that notwithstanding the provisions of subdivision (d) of section 1210 of the tax law or any other provision of law to the contrary, a local law enacted or amended pursuant to the authority of this act, imposing an additional rate of tax in the city of White Plains shall become effective in accordance with the provisions of subdivision (d) of section 1210 of the tax law, except that the certified copy of such local law must be mailed by certified or registered mail at least twenty-one days prior to the date on which such local law is to take effect.

Section 3 requires the city of White Plains to pay the estimated revenue from the additional one-quarter of one percent rate of sales tax first authorized by chapter seventy-four of the laws of two thousand ten 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.

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 those laws was extended for an additional two year period ending August 31, 2011.

Legislation enacted in 2010 permitted the city of White Plains to impose an additional one-quarter of one percent rate of sales tax for the peri- od ending August 31, 2011. Given the sharp downturn in the local econo- my, sales tax revenues had declined substantially since the last one- quarter of one percent rate of sales tax increase had been enacted in 2008. Since then, the city had depleted almost all of its fund balance. The 2010 legislation required the city to pay the proceeds of the rate increase into a contingency and tax stabilization reserve fund, under section 6-e of the general municipal law, which would assist the city in replenishing its depleted fund balance. Accordingly, upon being paid into the reserve fund, the proceeds of the rate increase could only be used upon the approval of a super majority of the city's common council and had 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 in accordance with section 6-e of the general municipal law. Thus, safeguards were built into the rate increase to ensure that the proceeds of the increase were applied prudently.

This bill will permit the city of White Plains to continue to impose each of these additional tax rates through August 31, 2013. This bill also extends through August 31, 2013 the requirement that the city pay the proceeds of the rate increase first authorized by chapter seventy four of the laws of 2010 into the contingency and tax stabilization reserve fund of such city, subject to all the limitations and other provisions of section 6-e of the general municipal law. This bill will not affect the sales tax revenue of Westchester County.

Sales and use taxes are the single greatest source of revenue for the city. In fiscal year ended June 30, 2012, sales and use taxes amounted to $51 million (36% of $1424 million in total revenues) compared to $47.1 million (33% of total revenues) collected from property taxes and related items (PILOTS, interest and penalties, etc.). The additional one-quarter of one percent rate of tax first authorized by chapter seventy-four of the laws of 2010 generates approximately $5 million of revenue each fiscal year. The city prudently applied $5 million from this fund to the adopted budget for fiscal year ending June 30, 2013, which had the effect of lowering the required property tax rate increase from 15% to 4.75%.

Legislative history

A.6105/S.3796 of 2011 (enacted in 2011); A.9966A/S.6868-A of 2009-2010 (enacted in 2010); A.3129/S.1087 of 2009- 2010 (enacted in 2009): A.6105/S.3796 of 2011-2012 (enacted in 2011)

Fiscal implications

None to the State.

Effective date

Immediately.