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Towns took sales tax meant to help county

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CANTON — Whether or not a change is made in the distribution of the county sales tax, I feel compelled to clarify the history of this tax and the current distribution between the county and the towns.

Jim Dawson, Brasher town supervisor, was quoted in the local media as saying that in 1965, the county Board of Supervisors voted to share the proceeds of county sales tax equally with themselves, the local towns. Since that time, roughly 50 percent of these county funds have consistently flowed to local government coffers.

Mr. Dawson suggests that it would be unfair for the local governments to be expected to receive less of the sales tax proceeds.

Unfortunately, the context of that decision in 1965 is not provided. Sales tax receipts belong to the county.

Counties were enabled by the state of New York to collect it because Medicaid expenses became a shared expense between the counties and the state (imposed by state legislation in 1965 and effective in 1966), and it became a significant county cost.

The result of the 1965 decision was that the county had to hire staff, implement the program and share the cost of Medicaid with only one-half of the promised revenue. That cost in 2012 of the shared expense alone (not including labor costs, overhead, administration, fringe, etc.) is over $23.2 million and is slated to go to almost $24 million in 2013. The county receives from the sales tax approximately $21.6 million. Additional costs are passed on to the taxpayers.

When this decision was made, the Board of Supervisors was comprised of the supervisors from each of the towns. They voted to give their towns one-half of the proceeds of this new revenue stream despite the fact that the costs associated with it were to be borne completely by the county.

Further, for many years the proceeds were paid only to the towns and not shared with villages despite the fact that most of the businesses that generate sales tax were located in central communities. Mr. Dawson suggests that the county is now contemplating doing to the towns what the state is doing to the counties. In fairness, the state gave the counties a revenue source to help pay for this large mandate but the towns (through their supervisors) immediately took one-half of it.

All local governments hate unfunded mandates, but not all of the county’s costly mandates came down from the state. One significant unfunded burden to the county came not from the state but from the towns.

In 1977 (just after creating a board of legislators with yet nearly a third of the members being town supervisors) those legislators voted to have the county take responsibility for all bridges over 25 feet in length. These bridges were more expensive to maintain, repair and/or replace, and many of them at that particular time were in a state of terrible disrepair.

The county was then required to absorb the expense. Of the more than 200 bridges the county is now responsible for, more than one-half are located on local town roads. That current and future liability well exceeds multiples of tens of millions of dollars, and the burden was transferred from the towns to the county.

Additionally, it is noteworthy that the county makes all local taxing jurisdictions (save the city of Ogdensburg) financially whole on their tax warrants when taxpayers do not pay their taxes. Thus, local communities never experience a budgetary or cash shortfall from their property tax proceeds including even unpaid utility bills. No one makes the county whole.

The county has tried over the years to keep tax increases to a minimum for its taxpayers. To do so it has tapped its reserves (fund balance) to the point that its expected balance at the end of 2012 will be less than $4 million. Its budget for the current fiscal year is over $235 million, so its reserve is under 2 percent.

By comparison, the towns and villages have a combined total of over $27.3 million of local dollars held in their fund balances with an average percentage of approximately 25 percent of their combined budgets.

So, for Mr. Dawson to suggest that it would be unfair to the towns for the county to reclaim some of its sales tax without some context and history is a disservice to the county taxpayers. Context is important.

In the next few months we will have to make tough decisions. It is my hope we can do so keeping in mind the good of all citizens of the county as well as the welfare of our towns and villages.

The writer is chairwoman of the St. Lawrence County Board of Legislators.

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