Hochul signs bill restoring Orange County sales tax sharing

Governor Kathy Hochul signed legislation Friday restoring Orange County’s sales-tax distribution rate to its municipalities, preventing towns, villages and other local governments from losing millions of dollars they had been expecting in their budgets. The fix matters in Goshen, Newburgh, Middletown and the county’s smaller villages because sales-tax sharing helps pay for basic local responsibilities such as public safety, road work, social services and day-to-day administration.

For more than a decade, Orange County had been sharing 3.75% of its sales-tax revenue even though the county was authorized to share only 3%. That mismatch created the risk of a large repayment problem for local governments, with one estimate putting the cost to municipalities at $20 million. Restoring the higher distribution rate gives local officials a clearer revenue stream as they close out the year and plan for staffing, infrastructure and other recurring expenses.

The county moved quickly once the error surfaced. On April 29, the Orange County Legislature approved a 17-0 resolution to submit a home rule request seeking special legislation that would retroactively authorize the extra 0.75% distribution. State lawmakers introduced bills on May 6 to correct the problem, and the legislation reached Hochul’s desk on July 11 before she signed it on July 18.

The dispute also exposed a basic point about sales-tax law in New York: counties cannot simply raise their sharing rate on their own. The New York State Comptroller’s Office said Orange County, like every county, needs special state legislation to exceed the 3% limit. Orange County leaders had argued for an emergency fix, while Comptroller Thomas P. DiNapoli’s office rejected the county’s claim that the problem stemmed from a defect in state law.

County Executive Steven Neuhaus said on July 2 that Orange County’s economy was softening and that sales-tax income was slowing, making the restoration more valuable to local budgets. That pressure comes as the statewide sales-tax pool remains large but uneven, with the state comptroller reporting more than $24.4 billion distributed to local governments and other local taxing entities in 2025, up 4.5% from 2024. For Orange County, the signed bill means the money flow to municipalities stays intact instead of becoming another budget gap for local taxpayers to absorb.