City of Poughkeepsie Mayor Nancy Cozean (D) says the elimination of the sales tax on clothing purchases under $110 in Dutchess County is the culprit behind a proposed tax hike for 2008.
Cozean presented her $60.6 million preliminary budget to the Common Council last month. The proposal represents the final budget of her administration, as mayor-elect John Tkazyik (R) takes the helm in January.
Cozean’s budget translates into a 7.4 percent increase in the property tax rate for homeowners on the city portion of their tax bills – a proposed residential rate of $6.67 per $1,000 of assessed property value. Non-homestead properties (primarily commercial) face a 9 percent increase with a tax rate of $8.21.
Dutchess County legislators rejected a proposal from County Executive William Steinhaus (R) to reinstate the sales tax on small clothing purchases with the 2007 budget.
Revenues from sales taxes, a major income source for the county, are divvied among municipalities, and Poughkeepsie’s losses amount to an estimated $500,000 per year, according to Cozean, who protested the county’s move. “To close the sales tax gap, Poughkeepsie will be forced to raise property taxes,” Cozean told council members.
Only one employee addition
Cozean said she attempted to keep the budget lean and reduce spending. Her proposal features only one new full-time employee – a police detective – and one part-time information technology employee for the police department. Tkazyik supported those additions, calling them “well deserved and needed positions.”
“I think it’s a very tight budget,” said Cozean. “Department heads are keeping their budgets flat.”
Even so, Common Council chair Brian Doyle (D-4th Ward) said the 7.4 percent tax rate increase was “far too steep.” Doyle said it was too early to discuss specific departments or budget items that could be cut. A series of meetings scheduled for review will be held on upcoming Saturdays – Nov. 24, Dec. 1 and Dec. 8. “We’ll certainly want to retain the level of city services people expect and want. That makes it difficult. We’ve rolled up our sleeves – we’ve only really just started. We’ll work hard and work together to do that,” said Doyle.
Asked if the sales tax was the main culprit behind the tax hike, Doyle said, “That’s something the mayor highlighted. Other areas include fuel costs, (union) bargaining units, contract agreements and insurance.”
Tkazyik, who is also the 3rd Ward councilman, agreed the proposed 7.4 percent increase was too high.
“We did have a lot of shortfalls with the sales tax, which has to be recognized,” said Tkazyik. “We’re reviewing it thoroughly and making every effort to bring it down.”
As council members continue their review, Cozean advocated caution regarding the fund balance – the amount held in reserve – saying it should be kept at “prudent levels.”
Governing bodies sometimes draw from a fund balance to help offset taxes, though keeping too little in reserve negatively impacts a municipality’s credit rating. “We’ve never had (the fund balance) this low before” under her administration, said Cozean.
While it keeps new programs to a minimum, the budget proposes an automated sanitation collection system that Cozean says will save the city up to $200,000 annually.
“Automated refuse collection will reduce the exposure of our employees to repetitive heavy lifting, thereby improving worker safety,” Cozean said.