Mohan wants greater share of county sales tax to go to towns
Says 1977 formula does not account for shifts in population
Amherst Supervisor Satish B. Mohan on Monday challenged the Erie County Legislature to refigure the decades-old formula that distributes $250 million in sales tax proceeds to cities, towns, villages and school districts.
Mohan wants a formula that accounts for the population shift from Buffalo to suburban towns, so the change he seeks would pinch the city. He proposed a new formula based on population and real estate values, which he figured would give Amherst about $6 million more each year.
“The sales tax distribution as it is computed today is unfair, inequitable and irrational,” Mohan said in prepared remarks to a Legislature committee. “The purpose for which it was designed does not exist anymore. The 1977 sales tax distribution formula must be revised.”
A city official vowed that if the County Legislature pursues a new formula, Buffalo will seek an even greater share than it collects now.
“The city is the brand to this region, the city is the core to this region,” said Buffalo Finance Commissioner Janet Penksa. “Our commitment to the sales tax and its revenue is unwavering. And if put to the test we will seek to increase it.”
The Legislature might dip a toe into the matter by setting up a task force of city and suburban leaders to come up with a broad-based agreement. But similar suggestions have been broached over the years, and the 31-year-old formula between Erie County and its three cities remains intact.
The pact was signed at the close of 1977 by Edward V. Regan, Erie County’s third county executive, and the mayors of Lackawanna, Tonawanda and Buffalo. Back then, the city had 463,000 residents — 48 percent of the county’s population.
The cities were given special status because in New York, they can charge their own sales taxes. In waiving their rights to do so, the three mayors agreed to a formula giving them two bites of revenue from the countywide tax of 3 percent at the time. Towns and villages did not have to sign off.
The formula works like this: About 10 percent of all revenue goes to the cities to share based on their populations. A little over 25 percent goes to towns, villages and cities, again based on their populations.
The county keeps 35.3 percent for county government needs. Erie then gives the remainder, 29 percent, to public school districts. It’s one of only five counties in the state to share sales tax money with schools.
Buffalo collects more sales tax revenue than any Erie County municipality by far, $64 million in 2006. But the city’s size has slipped to about 275,000 residents, less than a third of the county’s total population.
Buffalo has about 2.5 times the number of residents as Amherst, but its $64 million in sales tax receipts were five times Amherst’s $12 million. While Buffalo collected about $230 for every man, woman and child in 2006, Amherst collected $105 a person.
Mohan has been urging other town supervisors to support a change. But none spoke with him Monday. Orchard Park’s Mary Travers Murphy attended the hearing only to educate herself on the issue, she said.
“Everyone seemed to agree this is most likely broken. It most likely needs fixing,” she said. “But is it feasible . . . especially if Buffalo, Tonawanda and Lackawanna are not likely to accept less?”
County Executive Chris Collins, a Republican from Clarence, said while on the campaign trail that the formula might someday need to address the population shift. But a Collins spokesman said his administration would rather grow the tax base than reshuffle current tax dollars.
The Legislature’s three Republicans, all from suburban districts, have proposed that the Legislature tell the cities that it will terminate the agreement in a year, a precursor to installing a new agreement.
Two of the three — Edward
A. Rath III of Amherst and John J. Mills of Orchard Park— attended Monday’s meeting and later said they are willing to temper the suggestion by agreeing only to set up a task force, or a study group, at this point.
That might pick up support from a smattering of Democrats for another reason — to grab more sales tax revenue for Buffalo.
“I agree it should be opened,” Majority Leader Maria R. Whyte, D-Buffalo, said of the formula. “But in my opinion, we should base the formula on need. I think the idea that we are going to take money away away from a community determined to be the second-poorest in the country is, in fact, absurd.”
Buffalo officials and city residents also have complained about the formula. Erie County lawmakers raised the sales tax by 1 percent in 1985 but shared none of the proceeds with other governments until 2007. Some present and past city officials assert that Buffalo would have avoided a state-appointed control board if granted proceeds from the 1985 penny over the years.
Oddly, the city’s control board could protect Buffalo from any hit to its sales tax income. When the state let the Buffalo Fiscal Stability Authority borrow money on the city’s behalf, it called on Erie County to maintain a level of sales-tax support to Buffalo as an assurance to lenders. An aide to Comptroller Mark C. Poloncarz, Timothy C. Callan, told lawmakers Monday those assurances might tie their hands. A county attorney is doing more research.
Mohan noted the intent of the 1977 pact as described in its opening words: “. . . It is necessary for the County of Erie to adequately support the Buffalo and Erie County Public Library as well as to make contributions for the support of various cultural and public benefit services, some of which have heretofore been partially funded by the city . . .”
“The conditions that existed 31 years ago don’t exist any more,” Mohan said. “Erie County collects a dedicated library tax from the towns, villages and cities. The City of Buffalo does not fund any countywide cultural or public benefit services. Therefore a review of the sales tax distribution is warranted immediately.”
