Mar 29, 2010 Ami Olson Uncategorized
Onondaga County mayors and village residents gathered last Monday to persuade the Sales Tax Review Committee not to cut much-needed sales tax revenue funding to the county’s smallest municipalities next year.
The committee is charged with revising the current 10-year sales tax agreement that will expire Dec. 31. Under the current agreement, the county keeps 38 percent of the sales tax revenue it receives back from the state, then disperses the rest among the city, towns and school districts. The county is under no legal obligation to share its revenue — there are several counties in the state that don’t — and villages receive their share from the towns, not the county directly.
The March 15 meeting was the first in a series of Monday morning review committee meetings during which representatives from the most affected entities will make their case for keeping their portion of the sales tax revenue.
County Legislature Chair Jim Rhinehart, who also chairs the sales tax review committee, said around 150 people attended the meeting, which lasted four hours and included presentations by officials from many of the county’s 15 villages.
The sales tax revenue which trickles down to the villages totals less than 3 percent of the total revenue the county receives from the state, but in many villages those monies make up a third or more of the annual operating budget. Mayors from throughout the county reminded the committee that village residents enjoy more unique services than taxpayers in towns or the city — but those services would be in serious jeopardy without the sales tax money.
As a former mayor of the village of Skaneateles, Rhinehart said he understood where the mayors stood, and Monday’s presentations did not hold any surprises for him.
But there is the looming budget shortfall and a question of equity among taxpayers to take into account.
“We need to wade through the emotion and get down to the nitty gritty,” Rhinehart said.
Three options, none of them ideal
One of Rhinehart’s biggest beefs with the current agreement is that residents in each municipality in the county pay a different county tax rate.
“The way we share sales tax really needs to change, the system is so inconsistent and convoluted, every county tax payer pays a different rate for the same county services,” Rhinehart said. “And that’s wrong.”
But one of the options being discussed by the committee could fix that.
County Chief Fiscal Operator James Rowley, at the request of the committee, devised three options for the committee to consider, Rhinehart said.
Under the first option the county would retain 100 percent of the sales tax revenue money, an estimated $296 million, and use the sum to pay for state mandates like Medicaid. The remaining funds, anywhere from $80 to $100 million, would be used to equalize and lower the county tax levy.
A second possibility would have the county pay the estimated $165 million in state mandates then apportion the current percentages to the city and towns — but not the school districts.
Rhinehart said under this scenario the city would receive $21 million, the county’s 19 towns would split $24 million and the county would keep an additional $86 million.
The third option being discussed by the committee would see the county keeping 60 percent of the revenue, (the county currently retains 38 percent), or about $126 million. Money would still be shared with the city and towns, but at a smaller percentage — and school districts again would be left out of the equation.
Rhinehart said the sales tax revenue schools receive from the county account for about 1 percent of the annual budget, and that schools would not be at a total loss under any of the three options. Of the county’s 4 percent sales tax, only 3 percent is up for revision under this agreement — the remaining 1 percent, of which schools receive a portion, is not on the table this year.
He said it’s too early in the game for the committee to favor one option over another, but he did prefer fixing the “broken system” by equalizing the tax levy over temporarily solving it.
“The first option would change the system, it would fix it and make it right for all the taxpayers. The only problem is, its going to leave villages and towns that take sales tax in cash in a different position,” Rhinehart said. “But that’s the only path to accomplish 100 percent fairness and equity with county tax levy.”
Rhinehart also sees reviewing the current agreement as an opportunity to remove the “provision to hold harmless” clause, which promised sales tax revenue to the city, towns and schools would not drop from the previous year and forced the county to make up the difference.
Over the last two years, the county paid $14 million to cover the gap, and Rhinehart said that provision would be “gone.”
The committee is expected to recommend a revised sales tax agreement to the County Legislature May 1. The agreement would be voted on by both the legislature and Syracuse Common Council and would become effective Jan. 1, 2011.