TOWN OF NIAGARA – Niagara County figures to cash in on the sales tax generated by the coming expansion of the Fashion Outlets, and some of that money should be directed to needy municipalities, Legislator Jason A. Zona said Wednesday.
Zona, D-Niagara Falls, and Legislature Vice Chairman Clyde L. Burmaster, R-Ransomville, are co-sponsoring a proposal to study setting up a fund to help municipalities “facing fiscal difficulty,” according to their resolution.
The measure, which would create a bipartisan committee to study the idea, will be on the Legislature’s agenda Tuesday.
Zona said the idea arose when the Town of Niagara, which is in his district, asked the County Legislature to alter the sales tax distribution formula so the town would get a bigger slice of the pie.
Zona said he told the Town Board that changing the formula is “a non-starter,” but he came up with another way of potentially helping out.
According to the Fashion Outlets’ application for a property tax break from the Town of Niagara Industrial Development Agency, its 70-store expansion, due to open this fall, would generate an estimated $3.1 million a year in additional sales tax revenue.
Under the current population-based sales tax distribution formula, the Town of Niagara derives no special benefit from the presence of the giant mall or the many other stores along Military Road.
The town receives less than 2 percent of the local sales tax paid in the county, County Treasurer Kyle R. Andrews said. Seven towns receive less than the Town of Niagara, but the amount it receives, according to Zona, isn’t enough to pay for police and fire services needed in the bustling commercial strip.
“Local municipalities with lower populations and high commercial and retail occupancy receive less in sales tax revenue sharing, but have higher public safety and infrastructure financial obligations,” the resolution says.
The county, meanwhile, is to receive almost half of the sales tax the expanded mall will generate. Zona said his idea is to set aside $500,000 from that revenue for a fund to help municipalities in need.
“At this time, the county can afford to do this,” Zona said. He pointed to the county’s healthy fund balance and projected surplus this year, as well as the Legislature’s decision to direct County Manager Jeffrey M. Glatz to include wage increases for union employees in the 2015 budget if he can do so without breaking the state-imposed property tax cap.
Updegrove said he wasn’t sure the county really would have $1.5 million from the mall expansion, as Zona claims. He noted that the county really controls only 1.5 percentage points of the 8 percent sales tax. Four percentage points go to the state, and of the county’s 4 percent, one-fourth is reserved by state law to pay for Medicaid.
That leaves three percentage points in local hands, and the county keeps only 47 percent of that for itself, plus another 1.6 percent to pay for the 911 emergency phone system. The remainder is divided among the 20 municipalities based on their share of the county’s population, not on where the sales tax is generated.