On April 6 2021, you will be given the opportunity to vote on a referendum authorizing the Village of Deer Park to increase our municipal sales tax from 7.5% to 8% for a 3-year period beginning July 1, 2021. This temporary sales tax increase will provide funds needed to restore the General Fund balance from the loss of income experienced because of the Pandemic.
Shrinking retail and restaurant activity in our shopping centers has caused unforeseen reductions in Village tax revenue. The lost revenue has created budget concerns for the Village. Deer Park receives approximately 65% of its operating funds from sales, hotel and entertainment taxes. Forecasted revenues for the full Fiscal Year 2021 are projected to be down compared to prior year by 33%, or $1,000,000.
Deer Park is one of the few municipalities in the state that does not assess a property tax – so we always keep expenses as low as possible. With the Pandemic, the Board of Trustees has already reduced expenses and reviewed all options to raise additional funds, we are left with no other options. Raising the sales tax for an interim period is critical to keeping the Village financially solvent in upcoming years.
If approved by voters, the sales tax would be effective July 1 ,2021 and could generate approximately $700,000 in revenue annually. The additional income over the three-year period will allow the Village to; restore the General Fund Balance, reinstate expenses that were cut/eliminated when the initial shutdown occurred and return to providing services and infrastructure improvements that were identified before the Pandemic was upon us.
The amount of sales tax proposed is 50 cents on $100 purchase. A substantial amount of the municipal sales tax revenue is generated by non-Deer Park residents who shop in Deer Park. It is estimated that shoppers outside of Deer Park provide up to 90% of the municipal sales tax. Raising our sale tax rate to 8% will not affect our competitive position with surrounding communities and nearby malls as the majority are over 9%.