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Technicality could hamper proposed Lewis sales tax hike

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LOWVILLE — Lewis County officials are concerned that a technicality in state legislation intended to raise its sales tax rate could inadvertently lead to a three-month rate drop just in time for the Christmas shopping season.

“It’s a huge problem,” county attorney Richard J. Graham told legislators Tuesday morning.

State lawmakers in 2004 authorized Lewis County to raise its local sales tax rate from 3 percent to 3.75 percent and have since signed off on extensions every two years to keep it at that level. The tax is collected on applicable sales along with the state’s 4 percent tax.

The state Legislature in June not only authorized another extension but also granted the county’s request for an increase in the rate to 4 percent.

Mr. Graham said officials from the state Department of Taxation and Finance initially directed that the effective date be changed from immediate to Dec. 1, when the latest two-year extension is slated to expire.

While that change was made prior to passage, apparently there was not time to include later requested language changes from that state office, including a provision allowing the county to enact final approval of the hike in advance, he said.

Because of that, taxation officials are now saying county legislators would not be allowed to cast their final vote on the rate increase until Dec. 1, which falls on a Sunday, Mr. Graham said.

Even if that were to be done, the increase to 4 percent apparently would not take effect until the start of the next quarter on March 1, he said. All first-quarter sales — collected between December and February — would be taxed only on the 3 percent local rate, he said.

“It’s an impact or result that no one expected,” Mr. Graham said, noting the bill was drafted in Albany without local input.

County leaders have been planning to use any additional revenues from the hike — projected at $633,333 more than the $9.5 million budgeted for 2013 — to help fund the county’s ongoing emergency radio system upgrade project, and possibly a proposed office building on outer Stowe Street, without overburdening property taxpayers.

However, such a substantial rate drop in the first quarter of 2014 — which would include most Christmas shopping — could leave the county struggling to match 2013 sales tax receipts, even with a rate increase to 4 percent over the final three quarters.

While the situation is “disturbing, possibly catastrophic,” the county is seeking assistance from its state representatives to resolve the issue, he said.

However, Mr. Graham cautioned that state taxation officials don’t appear “willing to budge,” while a legislative fix would require the state Assembly and Senate to hold special sessions, an option state leaders may resist.

Legislature Chairman Michael A. Tabolt, R-Croghan, suggested the New York State Association of Counties be informed of the situation; Mr. Graham said the problem may prove easier to rectify if other counties are in a similar predicament.

Legislator Philip C. Hathway, R-Harrisville, said the issue must be considered in ongoing 2014 budget deliberations.

“We need to plan for the worst and hope for the best,” he said.

County leaders were unsure whether Gov. Andrew M. Cuomo had yet signed the Lewis County sales tax bill.

Tuesday’s meeting was held in the morning, rather than at the usual time of 5 p.m., to allow lawmakers to participate in their annual golf outing, held this year at Turin Highlands Golf Course.

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