Regional Archives — The Altamont Enterprise, March 25, 2010
“A warning shot across the bow”
Cut sales-tax funds to towns?
By Anne Hayden
ALBANY COUNTY — Acting on his own, the chairman of the Albany County Legislature, Daniel McCoy, sent a letter to municipal leaders alerting them that the annual sales-tax revenues they receive from the county may be cut or reduced in 2011.
“There is nothing in state statute that says we have to give that money back to the municipalities. Other counties keep it for themselves,” McCoy told The Enterprise yesterday.
For many towns and villages, the sales-tax funds supply the bulk of their revenues; most of the rest is raised through property taxes.
The memorandum, dated March 19, states that, due to dismal economic times, the county may be “forced into revisiting our fiscal relationship with the municipalities.” It goes on to say that one aspect to evaluate may be the distribution of the county’s sales tax.
According to Michael Connors, the county comptroller, Albany County collects an 8-percent sales tax; 4-percent of that revenue goes to the state of New York, and the other 4-percent is split 60/40 between the county and the 19 towns, villages, and cities within the county. A formula based on population determines the amount of revenue distributed to each municipality.
Guilderland Supervisor Kenneth Runion said roughly 90 percent of the town’s annual revenue comes from the county.
“Obviously, the municipalities have become attached and dependent on the money,” said McCoy, a Democrat, who was elected chairman in January. A lot of citizens do not realize the burdens the county takes on for the municipalities, and the services it provides them, he said.
“Somewhere like Guilderland, if we cut the sales tax revenue, might have to increase taxes by 10 percent. But, if we keep distributing the money, our taxes go up. This forces us to make decisions we don’t want to make,” said McCoy.
Actually, Runion responded through The Enterprise, if the county funds were eliminated, the town taxes in Guilderland would increase 12-fold — from 25 cents to $3 per $1,000 of assessed value.
Connors said yesterday that he had not heard anything about reconfiguring sales tax revenue distribution, but that the 2011 county budget would face challenges due to the loss of federal stimulus money totaling nearly $6 million for the county, a decrease in overall sales-tax revenue, and an increased demand of services for the poor.
This year’s county budget is roughly $607 million.
“The bottom line is that spending has to be reduced; the county needs to take an intelligent, creative approach, and work together with municipal leaders, rather than taking a reactionary approach,” said Connors, who did not believe reducing or cutting sales-tax revenue distribution was the best solution.
Connors said that the sales tax was increased by 1-percent in 1992. And, while several local legislators regarded it, at the time, as temporary, Connors said he proposed the measure and always knew it would be permanent.
The office of the county executive, Michael Breslin, also said yesterday that he was unaware of the proposal.
County legislator Frank Commisso’s name appears at the top of the memo, under “from,” along with legislators Sean Ward and Shawn Morse — all Democrats. Commisso, who represents part of Guilderland, told The Enterprise he had no knowledge of the memo’s release. He said discussions about sales-tax distribution take place every year during budget sessions.
“I do not ever foresee cutting sales tax revenue distribution completely. We just have to look at different ways of getting revenue to the county,” Commisso said. The state is cutting funding for the county, and, in return, the county has to find places to cut, he said. Re-configuring the distribution so that municipalities received 37 percent instead of 40 percent is something that has been discussed in the past, said Commisso.
Asked why Commisso had no knowledge of the letter, ostensibly from him, to municipal leaders, McCoy said he wanted the message to come from the heads of the legislature; Commisso is the majority leader and Ward and Morse are deputy majority leaders.
“It was mistakenly sent out before I had the chance to approve it. I wanted to discuss it at our caucus. But, it’s out there now,” McCoy said. He said putting the sales-tax revenue cut on the table for a vote had been discussed at a committee meeting.
Backlash?
“I don’t foresee a backlash on the part of the municipal leaders. We give them so much,” said McCoy.
Municipal leaders, though, are adamant that even a re-configuration would pose significant problems. Mayor Robert Conway, from Voorheesville, read the document out loud to board members at a March 23 village board meeting, and then said, “This is a warning shot across the bow…If the sales tax revenue formula changes, it could be problematic.” Conway urged board members to reach out to county legislators to get a feel for the true situation.
“We would vehemently oppose any changes in the distribution of sales tax revenue,” said Runion. “All the county would be doing is passing off tax increases. They need to find alternative solutions, and live within their means, rather than punish the municipalities.”
Runion said he received e-mails from the mayors of Cohoes and Watervliet yesterday, asking if he had gotten the memo, and if it was “for real.”
“I don’t want them freaking out. We just want to let Runion and others know this is serious, and show them how much we give them, on top of everything else,” McCoy said. In order to take effect, the proposal would need to be approved in a vote by the county legislature; the vote would not take place until the fall.
“The whole point of the letter was to open up the lines of communication and let people know we have to put the egos aside,” McCoy concluded. “We need to work together.”