Onondaga County considers reduction in sales tax revenue given to villages
Onondaga County mayors and members of the public last week gathered in Fayetteville to hear county Legislator Chairman James Rhinehart address a controversial issue affecting village finance.
The county sales tax agreement, under which municipalities receive financial support from Onondaga County, is due to expire Dec. 31. In an effort to close its own budget shortfalls, the county is considering significantly reducing or completely eliminating sales tax revenue passed on to villages. Mayors are in a bind, as the final decision will not be made until after they have already adopted their 2010-11 budgets.
According to the county's Chief Financial Officer Jim Rowley, the total projected sales tax revenue for 2010 is $279 million. Under the current contract, the county would get $129 million, or just over 46 percent; the city of Syracuse would get $62 million or 22 percent; towns and villages $71 million or 25 percent and school districts $16 million or 6 percent.
Fayetteville Mayor Mark Olson pointed out that Rowley's allocation breakdown report is misleading. Of the $71 million that goes to towns and villages, only $3 million, goes to villages.
"You're lumping us in with towns and that's not fair," Olson said.
To provide insight into the seeming injustice of the sales tax revenue distribution scheme, Rhinehart explained how sales tax has historically been collected and distributed.
Of the 8 percent levied, 4 percent goes directly to the state, 1 percent supports designated expenses such as Medicaid, which leaves 3 percent. The city is preemptively entitled to half of the 3 percent because the county collects city sales tax on its behalf. Thus only 1.5 percent remains to be distributed between the county, school districts and local municipalities.
Several audience members spoke out against the city retaining the lion's share of the sales tax revenue, pointing to the decline in the city's population and growth of suburban areas.