Proposal also would steer revenue to towns, villages

Four Putnam legislators who supported lowering the county's sales tax rate acquiesced on Monday (May 19), endorsing state legislation that will maintain the current 4 percent rate and send some proceeds to Cold Spring, Nelsonville, Philipstown and six other towns and villages.

Convening for a special session, the Legislature voted 7-1 to support bills introduced by state Sen. Pete Harckham and Assembly Member Matt Slater, whose districts include eastern Putnam, that would extend the 4 percent sales tax rate for another two years. Without the bill, the rate will return to 3 percent. Consumers pay a total of 8.375 percent on eligible purchases, which includes portions that go the state (4 percent) and Metropolitan Commuter Transportation District (0.375 percent).

The state legislation also requires that one-ninth of 1 percent of Putnam's sales tax revenue be shared with the county's nine municipalities.

State lawmakers first approved the increase from 3 percent to 4 percent in 2007, at the county's request, and a series of extensions have kept it in place. The most recent extension expires Nov. 30. In April, five county legislators voted to lower Putnam's tax to 3.75 percent as a give-back to taxpayers amid a $90 million surplus in unrestricted reserves.

But County Executive Kevin Byrne vetoed the reduction and announced an agreement to share with the towns and villages proceeds from the 1 percent increase if it were extended. Municipalities can spend the money on infrastructure projects, with each receiving an amount tied to its population and each guaranteed at least $50,000.

Harckham and Slater endorsed the agreement, which would take effect Dec. 1 and last through Nov. 30, 2027, if their bills pass the Legislature and become law. In addition to enabling what Byrne calls "a first-of-its-kind sales tax-sharing arrangement," the extension will fund a $1 million reduction in the property-tax levy for the 2026 budget that he said would be the largest in county history.

"The alternative was allowing the county's sales tax rate to drop, immediately creating a revenue shortfall of tens of millions of dollars, forcing the county to borrow, raise property taxes or both," Byrne said.

Facing those same pressures, Putnam's municipalities have for years demanded a share of the sales tax revenue, something that 50 of New York's 62 counties do with their cities, towns and villages, according to the state Comptroller's Office. Dutchess' 2025 budget includes $46 million in sales tax distributions, with an estimated $6.1 million for Beacon.

If the proposed revenue-sharing agreement had been in place in 2024, Putnam would have distributed $2.4 million to the towns and three villages on a per capita basis, Byrne said during a news conference last month.

"I haven't heard a single constituent ask us to lower the sales tax," said Nancy Montgomery, who represents Philipstown and part of Putnam Valley as the Legislature's sole Democrat, on Monday. "What I have heard loud and clear is stop the back and forth, stop the chaos and work together."

Legislator Dan Birmingham, who led the effort to lower the sales tax rate, did not participate in the vote because his law firm represents three of the municipalities that would benefit from the revenue-sharing agreement. Another supporter of the cut, Paul Jonke, was the only legislator voting against endorsing Harckham and Slater's legislation, which must pass the state Legislature before its session concludes on June 12.

Amid that pressure, legislators who voted for the vetoed sales tax cut last month endorsed maintaining the current rate. But they complained about being sidelined while Byrne and the municipal officials reached a revenue-sharing agreement and secured backing from Harckham and Slater.

Legislator Toni Addonizio, who had voted for the cut, was among those who did not agree with how the revenue-sharing agreement was crafted. She had proposed...