The year 2020 has taken all of us by storm. Covid-19 has forced everyone to reassess life, work, education, where to live, finances, etc.
Your County government has been re-evaluating as well. Our State had a budgetary hole of $6 billion before the virus. State aid reductions were being talked about then, and those conversations have gotten more dire as the year and virus have marched on. As we legislators prepare for next year’s budget (for a few of us, this will be our first), we absolutely do not want to exceed the property tax cap. But in this year, how can we possibly achieve that goal?
We need to put in motion a financial framework that will strengthen the County’s balance sheet well into the future. Decisions being made now have that eventual goal in mind.
Starting September 1, 2020 and running through February 28, 2023, a tax of 4% will be added to the total of every residential electric bill generated in Sullivan County. The tax will also be assessed on all residential heating bills (oil, propane, natural gas, wood, steam and electric) for properties within Sullivan County, regardless of where the delivery originates or the fuel company is located.
This tax already applies to commercial users and has been since 1975. That’s when this tax was actually instituted, albeit with an exemption on residential users.
Eliminating the residential exemption on the energy tax is anticipated to generate at least $2.5 million a year. We could raise that amount with a 4% property tax hike, of course, but that would not include any property tax-exempt properties – whereas only those who don’t currently pay sales tax will be exempt from the energy tax. That makes it fairer all around because, after all, we’re in this together.
A property tax hike would be on top of the current 3% property tax cap, and property tax increases typically negatively affect property values. Plus, a property tax wouldn’t end, as we all well know. However, this energy tax WILL sunset on February 28, 2023. Don’t believe it? The three-and-a-half-year time period doesn’t solely stem from the fact that we expect our fiscal stress to continue well beyond next year. We chose 2023 – an election year – so that voters will clearly remember on Election Day whether their legislators let this tax evaporate or hung on to it. I’ll still be a legislator myself, so you’ll definitely have me to hold accountable.
Why do we need the tax to begin with? For starters, the State has already told us to expect 20% cuts in aid across the board – without any kind of mandate relief. We’ll still need to provide required services, and we’ll have to dig 20% deeper in our own pockets to do so. Considering we receive $26 million in State aid, that translates to $5.2 million that may never come our way.
We keep losing potential sales and room tax revenues because so many of our businesses are either closed or operating at limited capacity. As of the writing of this letter, those losses have topped $600,000 compared to the year before, and some of our biggest generators – like Kartrite and Resorts World – remain shuttered indefinitely by the Governor.
Speaking of the casino, we’re anticipating losing at least $2.1 million in gaming proceeds due to its closure, and if and when it is permitted to reopen, the bounce-back will not be immediate for them or for us.
There’s some blame to put on the prior Legislature, as well. Our recently released independent audit shows (and our auditors specifically noted) that we spent more than we took in during the last four years. That starts us out at a disadvantage.
All in all, we’re predicting as much as a $26 million revenue shortfall for this year, with losses stretching into 2021 and beyond. In the meantime, we’re laying off staff, leasing the Care Center, taking pay cuts, freezing spending and accounting for every penny, so this energy tax is not an opportunistic grab. It’s the result of a harsh and sobering reality, plain and simple.
Listen, if you have other ideas about how to balance our budget, I welcome them at Robert.firstname.lastname@example.org or 845-807-0435. We think we’ve seriously considered everything possible, but you may have an idea worth exploring. I’m a taxpayer, too, so if there’s a way we can avoid further burdening taxpayers, I am absolutely all ears.
Robert A. Doherty, Chairman
& District 1 Legislator
|Sullivan County Legislature
The opinions expressed in the letter are those of the author and do not necessarily represent those of Mid Hudson News.