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Proposed Sewer Rent Law: Losers and Winners

October 13, 2005


On October 17th residents will again have the opportunity to comment on the proposed Sanitary Sewer Rent Law hastily withdrawn in April, after bipartisan community protest. At first glance this proposed law seems nothing more than a revenue neutral accounting transfer where sewer funding is transferred from the Village general fund to a separate stand alone account. THIS IS NOT TRUE.

This action if passed by the Village Board will transfer approximately $150,000 from the general fund appropriations to a separate account, thus lowering Village tax rates artificially, or allowing $150,000 in new spending before taxes rise, at the same stroke sanitary sewer financing will be transferred, in part, to individual homeowners’ water bills and tax exempt water users. Here is my list of winner and losers with this proposed law.

The Losers:

Renters - Property owners facing a non-deductible expense will certainly pass on this TAX to tenants as purely a business decision.

Septic Owners - Residents maintaining septic systems will now pay a TAX for sewer services they do not receive, and, still face yearly septic tank maintenance fees.

Tax Exempts - In part, the proposed TAX transfers costs of maintaining village sewers to the Croton-Harmon School District and Metro-North, one of the largest water users. Clearly the School district will pass on the expected costs to district residents, approximately 70% of which live in the Village. These “costs” will be paid through higher school taxes or cuts to an already tight budget. This now places an extra burden on our Board of Education and District administrators, to decide how to handle this new expense.

Metro-North does not use Village sewer infrastructure and has a separate sanitary sewer agreement with Westchester County for sewage disposal, doubts remain as to whether Metro-North will pay the new fees or sue the Village.

Village Residents - No longer will residents be able to deduct on their income tax returns the costs of sewer operations and maintenance including management fees, because they will no longer be included in the Village property tax. Sewer rents collected MAY ONLY BE USED FOR SEWER PURPOSES by state law, and are not deductible at tax time.

The sewer fund as proposed may not generate sufficient revenue at the 10% or 15% add-on to water bill rate proposed, to generate adequate funding of capital projects making likely an ever-increasing sewer rent possible. An example is Peekskill, which now charges 20% of residents’ water bills as sewer rent.

The proposed law also calls for a “reasonable contingency fund” of unspecified amount to be established. A contingency fund exists under the Village general fund for unexpected expenses, this second contingency fund is duplication of services and needlessly parks residents TAX dollars in an account that may or may not be used for years. A quick analogy would be a mortgage company establishing a second escrow account to service your mortgage and taxes but never actually using your money.

Our houses of worship contribute to and define our community and sense of self. Placing a TAX burden on those non-profits that serve residents spiritual and community needs so well is poor public policy, and morally bankrupt, even if the sewer fee charged is $.50 to our houses of worship, the principal remains the same.

Veterans, Disabled, And Seniors - Significant well deserved property tax exemptions exist for seniors, the disabled, and our beloved veterans. With sewer funding through the general fund as is the case now, these groups benefit from the exemptions the Village provides. If the sewer costs are transferred as proposed, our seniors, disabled, and veterans will have a disproportionate increase in their expenses.

The Winners:

Landlords And Commercial Property Owners - Landlords and commercial property owners with high water usage especially, will pass on this sewer TAX to tenants, and customers, while pocketing the decrease in the Village tax rate.

— Charlie Kane
Trustee, Village of Croton-on-Hudson

On October 13, 2005 9:47 PM, Pat Barua said:

Thank you, Trustee Kane and Trustee Wiegman. Now I know that your opposition is well thought out and not just a knee jerk reaction to the Republican majority’s proposal.

I wish the Mayor or Trustee Steinberg or Trustee Brennan would respond to your points. I remember at the last hearing on this, somebody asked for a written analysis of who would be the winners and losers on this proposed law.

Somebody else asked why we were taking $150,000 of deductible property tax and turning it into nondeductible sewer rents. From what the Democrats wrote, it sounds like it is being done to squeeze $3,000 from the churches and the schools.

Could we please hear from the other side — and I mean from OUR ELECTED OFFICIALS who PROPOSED this law and I would hope have a response?

On October 13, 2005 8:59 PM, Mrs. Smith said:

Thank you Trustees Kane and Wiegman for illuminating the facts behind the new sewer tax in Croton.

Why would the administration want to be so small minded as to bring in such a tax when there are no benefits - is it worth alienating our churches, schools and Metro North for a back door way of artificially lowering property taxes, that is, assuming they will apply this additional revenue to lower the property tax, and can they legally apply the new sewer tax revenue to the general fund?



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