At county level, taxpayers may be hit by triple whammy
State budget proposal carries ripples for sales, property levies
Consumers now know they will pay more to Albany if the state expands the sales tax to cover movie tickets, massages, cable television and music downloads.
But it won’t stop there.
By extension, consumers will pour more money into county governments, too.
And into towns, villages and school districts.
So the spinoff from the take-more budget strategy is worse than it first appeared for taxpayers watching their wallets.
A governor’s spokesman said consumers will provide an estimated $328 million in county-charged sales taxes in 2010 if Gov. David A. Paterson’s budget proposal moves unscathed through the State Legislature.
Here’s why: The state and county governments levy their sales taxes in tandem. New York charges 4 percent on purchases for its needs. Then counties add their rate, usually about 4 percent. The state Department of Taxation and Finance handles the mechanics for both.
When state budgetmakers figure they will collect, say, $53 million in their next budget year by charging sales tax on “entertainment-related spending,” they are not counting the other $53 million that will be required for county-levied sales taxes, as well.
“You can take any sum of money that would be raised from the sales tax increase and double it, because counties all tax the same things,” said E. J. McMahon, director of the Empire Center for New York State Policy.
He agreed that Paterson’s proposed budget would deal taxpayers a triple whammy: More sales taxes paid to state government; more sales taxes paid to county governments; and perhaps higher property taxes, as schools adjust for the state aid they didn’t get, and county governments take on some of the state’s costs.
“This is one more example of how county governments are inextricably tied to New York State and its programs and services,” said Mark F. LaVigne, a spokesman for the State Association of Counties. “The decisions that they make in Albany have a direct implication for counties and county taxpayers.”
Erie County is a little unusual. It charges a higher sales tax than any other county, 4.75 percent. Erie then shares its proceeds with towns, villages, cities and — unlike most counties — with public schools so they might temper their property tax rates. All of those units count on the money each year.
County Comptroller Mark C. Poloncarz this week analyzed the effects of the proposed state budget on his government and noticed that more sales tax money is likely as consumers are forced to dig deeper. But he found it impossible to calculate how much more Erie County might collect.
Erie County consumers would be unaffected by two sales tax changes, because those consumers already take the hits:
• The state would again charge sales tax on clothing and footwear purchases of less than $110. Erie County already charges sales tax on those purchases.
• New York would no longer cap its sales tax on gasoline at 8 cents a gallon. Erie County never capped its sales tax on gasoline.
County government leaders in New York had worried that Albany would saddle them with more costs as a way to close the state’s deficit. State leaders did just that in a few areas. So counties might face new expenses because of Paterson’s proposed budget.
Poloncarz found these problems being laid on Erie County:
• The reduction in aid to community colleges would cost Erie Community College $1.2 million for 2009-10.
• The budget reduces aid to public libraries by $13 million, meaning that the Buffalo & Erie County Public Library system might receive less than in previous years.
• The state would no longer give county jails $37 a day to house parole violators and inmates awaiting transfer to state prisons. The state Department of Correctional Services would instead have to retrieve its prisoners within 10 business days or pay $100 a day.
• The Paterson budget sweeps some money from state authorities into the state’s general fund. The Erie County Fiscal Stability Authority — the state-appointed control board — would have to relinquish half of the “efficiency grant” money it has not yet committed to county projects, or $7 million.
• A reduction in spending under the state’s Consolidated Highway Improvement Program could cost Erie County $1.5 million next year, Poloncarz said.
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