A nosedive in mortgage tax and other revenues is putting intense pressure on local municipalities as officials seek to balance their budgets, a situation that could signal possible service cuts in the near future.

The Town of Rye reported a 39 percent mortgage tax revenue drop for 2009 according to Town Supervisor Joseph Carvin. In dollars and cents, this means that last year the town collected close to $548,000 in mortgage taxes compared to slightly more than $898,500 the year before.

Mortgage tax revenue--collected on home sales, home construction or any re-mortgaging efforts--is a major source of income for municipalities, especially those that do not collect sales taxes.

Many cities and towns in Westchester get sales tax revenue as a portion of the sales tax revenue of the entire county, but a recent report by the New York Comptroller's Office found that these revenues were down by 5.9 percent statewide in 2009. Westchester experienced the biggest drop of any county, with a decline of 10 percent.

"Local governments need to review their 2010 sales tax projections based upon the weak results from 2009 and adjust their budgets accordingly," the report said.

With both mortgage and sales tax receipts down, many municipalities are also being faced with a general decline in non-property tax revenues. The Town of Rye had $4 million in non-property tax revenues in 2007, which is down to $2.4 million for 2009.

"Our revenues have dropped substantially and I'm assuming that's the case with just about every municipality around," Secretary to the Town of Rye Supervisor Bishop Nowotnik said. "There's grant money and those kinds of things but [the big problem is] mortgage tax revenue. And our mortgage tax revenues have plummeted."

The Village of Rye Brook is facing the same downward spiral in non-property tax revenues. Sales tax revenues have gone down 5 percent from slightly more than $1.15 million in the 2006-2007 fiscal year to about $1.1 million in the 2008-09 fiscal year. More troublesome for the village, which will approve its 2010-2011 budget in April, is the decline in mortgage tax revenues. These revenues have plummeted 44 percent from close to $639,000 in 2006-07 to slightly less than $282,500 in 2008-09.

"Mortgage tax as well as sales tax have all had an impact on our budgets," Village of Rye Brook Administrator Christopher Bradbury said.  "Mortgage tax also has other implications. If people are doing less building, that also means less revenues for building permits and other fees."

In the city of Rye, the picture is similar. Mortgage tax revenues have dropped 22 percent from about $2.08 million in 2006 to about $1.62 million in 2008. On the upside of the revenue outlook, Rye has generated 8 percent more in property taxes during the last few years, from more than $16.9 million in 2006 to more than $18.2 million in 2008.

While the City of Rye Comptroller Jean Gribbons said there is not a direct correlation between the two, the overall reality is that municipalities are facing a bleak revenue picture.

"It's not like a dollar in mortgage tax is going to affect a dollar in property tax," Gribbons said. "But you can see the numbers. What we would have to do would be to react; we would have to react by cutting expenses somewhere."

The reality, however, is that either services need to be cut or taxes will be increased.

"They're cutting back, there's no doubt," Carvin said. "Everybody is evaluating their costs."