Assembly hang up could hit local property tax bills hard
Will state lawmakers act before the 2017 legislative session ends June 21 on what has become a routine request from most New York counties — including Yates — to approve action allowing the local sales tax rate to remain at the current level? Or will Yates County property taxpayers have to withstand an increase in their tax bills and/or cuts in services to cover the potential for nearly $3 million shortfall that could result?
County officials all over New York State are raising the alarm about the potential for a gaping $1.8 billion hole in local budgets, according to the New York State Association of Counties (NYSAC).
Yates County Treasurer Winona Flynn says failure to maintain the local sales tax rate at 4 percent would be "devastating" to the Yates County budget. She says, "A 1 percent loss of sales tax revenue based on our 2016 sales tax revenues would equate to $2,871,332 or almost $3 million."
The Yates County Legislature first requested home rule for the .25 percent mortgage tax renewal and sales tax renewal in March. It's a formality that local officials have gone through every two years for some time, and in every other instance, state officials have obliged the request. This year, the county home rule requests have been been lumped with a bill related to the New York City mayor's authority over New York City Schools.
Yates County Legislative Chairman Timothy Dennis comments, "Sen. O'Mara and Assemblyman Palmesano know how critical this issue is to us. Each year we ask for legislation to avoid these extenders or at least make them less frequent. That has gained no traction. I doubt there will be another session before we start the budget process. The failure to act could cost us about $3 million. That will devastate our budget and cause either massive cutbacks or an unacceptable local property tax increase. It is time for the state government to act in a responsible manner and pass these extenders. Following that, we expect the governor to act responsibly and sign them promptly."
Sen. Tom O'Mara (R) commented Monday afternoon, "The Senate has passed each county sales tax extender for the counties within the 58th Senate District which I represent, including Yates County. This has been done in the way it has always been done in the Legislature.
That is, each county extended in its own individual bill."
O'Mara says the hang up is in the Assembly, where all county sales tax extensions are lumped in one bill that has been coupled with an extension of the New York City Mayor's control of the New York City Schools. "The sales tax extenders have never been handled
this way in the past," says O'Mara.
A statement released by NYSAC Monday, June 19, says, "Gov. Andrew Cuomo and State Legislators are poised to leave Albany without passing county home rule sales tax extenders, but there is no talk of the consequences of inaction.
"County budgets, which will be developed over the course of the next two to three months, have to account for the loss of these revenues," said NYSAC Executive Director Stephen J. Acquario. "We use property taxes and sales taxes to fund state mandates and local programs. If lawmakers leave the Capitol this week without extending sales tax authority, then there will be a $1.8 billion hole, which would have to be filled with property taxes. Additionally, over of the $1.8 billion in revenue, $400 million is shared with hundreds of other local governments."
According to Acquario, after New York State required counties to fund a local share of Medicaid and other state-mandated programs and services, the state granted counties authority to levy a local 3 percent sales tax rate on purchases. Beginning in the 1990's, when the State dramatically expanded Medicaid and implemented new mandates for preschool special education, most counties were forced to increase their sales tax rate to keep up with the rising cost of state mandates. Any tax rate over 3 percent needs to be authorized by the State Legislature every two years. These "extenders" are traditionally enacted without controversy.
Gov. Cuomo and State Lawmakers have made property taxes a major political and policy platform for the past decade. They've enacted a 2 percent property tax cap, a property tax freeze rebate program, the county-wide shared services panels, they reformed the State's retirement program, and capped the local share of Medicaid, all with an eye toward property tax stabilization.
This year, 53 counties need to extend their current sales tax rate.
"In one fell swoop State Leaders could undo everything that has been done in the past 10 years to curtail property tax increases," said NYSAC President William E. Cherry, the Schoharie County Treasurer. "We could be looking at property tax increases equaling $1.8 billion just to keep programs and services operating locally."
While some have suggested that lawmakers could return in the fall to pass these home rule sales tax extenders, county budget officers will have already developed their respective 2018 fiscal plans, with several introducing them in September. Once the property tax levy is set for the year, it cannot be undone.
"We need lawmakers to act before the end of this week. If they do not, then program cuts, staff layoffs, and property tax increases are a direct result of their inaction," said NYSAC President William E. Cherry.