POUGHKEEPSIE, NY — Increases could be horizon to both the sales tax rate levied on nearly every purchase made in Dutchess County as well as the tax charged to those who choose to spend the night in any of the hotels and motels located throughout the county.
The amount to be raised by property taxes, meanwhile, will decrease by $50,000 under the 2024 budget unveiled earlier this month by Dutchess County Executive William FX O’Neil.
County residents will have the opportunity to voice their opinions on the proposed $599.5 million spending plan at a public hearing scheduled for 7 pm on Dec. 4 in the legislative chambers of the County Office Building, 22 Market St., in Poughkeepsie.
In his only budget as county executive, O’Neill proposed a $599.9 million spending plan for the upcoming year which increases spending by 2% or $11.9 million from the $588 million 2023 adopted budget. O’Neil became county executive in January 2023 after former County Executive Marc Molinaro resigned to take a seat in Congress, where he represents the 19th Congressional District.
Through a combination of reductions in spending and increases in anticipated revenues, members of the Legislature’s Budget, Finance and Personnel Committee reduced O’Neil’s tentative plan to $599.5 million.
Unchanged in the amended plan are O’Neil’s proposals to increase the sales tax paid on all taxable purchases made in the county and the occupancy tax paid by visitors lodging in the county.
The increases would help offset what officials say is a $24 million gap between revenues and expenses in the budget.
As proposed, the county’s share of the sales tax would increase by 0.25% to 4% from the current 3.75% tax. In addition to the county sales tax, the state charges a 4% sales tax and the Metropolitan Transportation Authority levies a 0.375% tax. Combined, the sales tax charged in Dutchess County would rise to 8.375% from the current rate of 8.125%.
Budget Director Jessica White told committee members that the sales tax increase – if approved by the state Legislature – would go into effect in June. She said it is expected to generate $10 million in gross sales tax receipts in 2024 and an additional $17 million thereafter. The county shares a portion of all sales tax receipts with the cities of Poughkeepsie and Beacon and each of the county’s 20 towns.
White said that 18% of the sales tax generated in Dutchess County comes from shoppers from outside of the county, meaning that 82% of the tax revenues are paid by county residents. Sales tax is levied on all goods and services sold in the county except food, some medical items and clothing and footwear under $110.
Under state law, counties are permitted to impose a 3% sales tax. They can obtain approval from the state to exceed that 3%, but the authority must be approved by the state Legislature.
O’Neil’s budget also calls for a 1% hike in the occupancy tax, also known as the hotel/motel tax, to 5% from the current 4% beginning in July. The increase, which O’Neil said in a release is “capitalizing on the strong visitor interest” would generate an additional $4.8 million in 2024.
Like the proposed sales tax increase, the county must seek state permission, via a “home rule request,” to increase the occupancy tax. If the state Legislature approves the county’s request, the Legislature would have to adopt a separate resolution authorizing the increase.
In June, the state Legislature approved a resolution by Ulster County to increase its occupancy tax to 4% from the current 2%, but Hochul has yet to sign that legislation.
Lawmakers are scheduled to vote on a final 2024 budget in December.