GOSHEN – The Orange County Legislature did not pass a resolution to enact a temporary cap on gas sales tax during a special meeting on Tuesday, as prices hover at $4 per gallon.
Nine Democrat legislators voted in favor of the cap, which has been enacted by neighboring counties, while eight, all Republicans, were against it. Pursuant to Legislative Manual rules, 11 votes are needed to pass a resolution whether . Legislators Michael Amo, Mike Essig, Genesis Ramos, and John Revella did not attend the meeting.
The Legislature did pass a resolution by a vote of 17-0 to submit a home rule request to the State Legislature, which seeks the approval of special legislation that would retroactively authorize the additional 0.75% distribution.
One Republican legislator, Kathy Stegenga, was concerned about local impact if the sales tax error was not corrected.
“If we are not able to and it doesn’t pass and get signed, this will be one more tip tht will push our villages and towns into an area where they are going to have to raise taxes,” he said.
The request was needed after it was revealed last week that Orange County had illegally overdistributed sales tax revenue to municipalities since County Executive Steve Neuhaus took office in 2014, an error that could now leave the county’s local governments facing a combined shortfall of nearly $20 million in 2026.
Since 2014, the county has been sharing revenue from the 3.75% of sales tax it is permitted to keep; legally, they are only authorized to share from 3% of the 3.75%. Senator James Skoufis (D, Orange County) said that the County’s sales tax resolution vote on Tuesday is merely symbolic because he has already begun to draft legislation with Assemblyman Chris Eachus (D, New Windsor) “to fix the county’s error.”
The legislation would have to pass through the Assembly, Senate, and be signed by Governor Hochul, as concerned municipalities make contingency plans, such as potential hiring freezes, budget cuts and other cost-cutting measures, if the legislation is not passed. Due to the County’s error, its 42 municipalities have lost $5 million in sales tax revenue in the first quarter of 2026. If the legislation is passed, the County’s towns, villages, and cities will be reimbursed the full amount retroactively to January 1, 2026.
Several legislators were hesitant to pass the gas sales tax resolution, sponsored by Democrat Stephen Hunter, which would have capped the tax at $3 per gallon at the pump, because of the deficit the County’s sales tax error could put municipalities in.
“If we lose that 0.75% in sales to our towns and villages, it is going to have a devastating impact,” said Kathy Stegenga, one of eight Republicans who voted against the gas sales tax resolution. “We will not know that until the legislation hits the floor, goes through those committees, and gets voted on. If that doesn’t pass, we are looking at some devastating facts for our villages and towns as far as that 15 to 20 percent that they always put in their budgets, so they don’t have to raise taxes.”
“Relative to our municipalities, they are standing in limbo right now, and they don’t know what to do or how to react,” added Republican Legislator Barry Cheney. “They know that the worst is almost untenable and the best is putting them back kind of where they would be for the year. Sales tax I would say for every municipality is one of their top two revenues sources. Any money you don’t get from sales tax, there is only one source to get that funding, and that is the property tax. We all know how devastating that could be on or property owners.”
Hunter spoke passionately about the gas sales tax resolution and was disappointed when it failed.
“People who are saying we will lose money because of this resolution, I believe that rationale is a bit misdirected,” Hunter said on the Legislative floor. “I understand the sales tax issue, coupled with this gas tax cap, has created a bit of a conflict. But all it would take is 20 percent of people to fill their gas tanks somewhere else, for this to have a larger impact on our sales tax revenue.”
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