The Consequence of Inaction: Bracing for Property Tax Increases
Governor Cuomo and State Legislators are poised to leave Albany without passing county home rule sales tax extenders, but there is no talk of the consequences of inaction: a gaping $1.8 billion hole in local budgets.
With three days left in the 2017 Legislative Session, Governor Andrew Cuomo and State Legislators are poised to leave Albany without passing county home rule sales tax extenders, but there is no talk of the consequences of inaction: a gaping $1.8 billion hole in local budgets, according to the New York State Association of Counties (NYSAC).
"County budgets, which will be developed over the course of the next two to three months, have to account for the loss of these revenues," said NYSAC Executive Director Stephen J. Acquario. "We use property taxes and sales taxes to fund state mandates and local programs. If lawmakers leave the Capitol this week without extending sales tax authority, then there will be a $1.8 billion hole, which would have to be filled with property taxes. Additionally, of the $1.8 billion in revenue, $400 million is shared with hundreds of other local governments."
After New York State required counties to fund a local share of Medicaid and other state-mandated programs and services, the State granted counties authority to levy a local 3 percent sales tax rate on purchases. Beginning in the 1990's, when the State dramatically expanded Medicaid and implemented new mandates for preschool special education, most counties were forced to increase their sales tax rate to keep up with the rising cost of state mandates. Any tax rate over 3 percent needs to be authorized by the State Legislature every two years. These "extenders" are traditionally enacted without controversy.
Governor Cuomo and State Lawmakers have made property taxes a major political and policy platform for the past decade. They've enacted a 2 percent property tax cap, a property tax freeze rebate program, the county-wide shared services panels, they reformed the State's retirement program, and capped the local share of Medicaid, all with an eye toward property tax stabilization.
This year, 53 counties need to extend their current sales tax rate, but these bills have become snagged in unrelated policy disputes between the two houses of the State Legislature. The result is that both the Senate and Assembly have indicated they are prepared to end session without approving county home rule sales tax extension requests.
"In one fell swoop State Leaders could undo everything that has been done in the past ten years to curtail property tax increases," said NYSAC President William E. Cherry, the Schoharie County Treasurer. "We could be looking at property tax increases equaling $1.8 billion just to keep programs and services operating locally."
While some have suggested that lawmakers could return in the fall to pass these home rule sales tax extenders, county budget officers will have already developed their respective 2018 fiscal plans, with several introducing them in September. Once the property tax levy is set for the year, it cannot be undone.
The consequences of inaction:
- Erie County would need to more than double its tax levy to make up the loss of their sales tax above 3 percent;
- Nassau County would lose $113 million and its cities, towns and villages would lose $169 million;
- Suffolk County would lose $333 million and would require a 60 percent increase in property taxes to maintain services;
- Onondaga County would lose $62 million and would require a 45 percent increase in property taxes to maintain services;
- The City of Syracuse would lose $21 million and would require a 65 percent property tax increase to maintain services;
- Albany and Broome counties would each need to raise property taxes by 43 percent to maintain services;
- Orange, Rockland, Ulster, and Dutchess counties would all need to raise county property taxes by 30+ percent to maintain services
"We need lawmakers to act before the end of this week. If they do not, then program cuts, staff layoffs, and property tax increases are a direct result of their inaction," said NYSAC President William E. Cherry.
&‹Media Contact: Mark LaVigne, NYSAC Deputy Director
The New York State Association of Counties is a bipartisan municipal association serving the counties of New York State including the City of New York. Organized in 1925, NYSAC's mission is to represent, educate, advocate for, and serve member counties and the thousands of elected and appointed county officials who serve the public.