Indecision Prevents Passage Of Local Sales Tax Extender
Requests to extend county sales tax rates have gone without controversy for many years in Albany.
This year was a different story as session concluded and lawmakers left without moving sales tax legislation to Gov. Andrew Cuomo’s desk for signature.
Chautauqua County was among 53 counties with a bill before the state to impose an additional 1 percent in order to maintain an 8 percent sales tax. The county also had a request in to continue a 5 percent occupancy tax rate, which applies to hotel stays.
Unlike previous years, intertwined with extender authorizations was an issue in New York City regarding mayoral control of schools. As session ended, the Republican-controlled Senate and Democratic-led Assembly couldn’t come to an agreement.
Cuomo said Tuesday he’s calling legislators back for a special session today at 1 p.m. to hash out extending mayoral control for an additional year and other subjects he may recommend.
In May, the Assembly approved to reauthorize local sales taxes, which needs legislative action every two years. According to Assemblyman Andy Goodell, R-Jamestown, the Democratic leadership decided to put all sales and occupancy tax authorizations into one bill. In the past, Assembly members would approve county sales tax extenders one bill at a time.
Democrats in the Assembly not only tied extenders into one bill this year, but they also included the fight over mayoral control of New York City schools at the end of legislation.
“They did that because they wanted to force all upstate legislators to vote for one bill that included mayoral control even though they might otherwise object,” Goodell said. “They’re completely unrelated issues and the State Senate correctly said those are two separate issues.”
Last week, Assembly Speaker Carl Heastie said the house had no desire to return as they were comfortable with the bill they passed.
“However, if the governor and/or the Senate is asking us to engage, we would be derelict in our duties not to consider those requests,” he said.
While the bill is still in limbo, Chautauqua County will maintain an 8 percent sales tax rate until Dec. 31. If state legislators failed to pass legislation before that time, the sales tax in Chautauqua County would go back to 7 percent in 2018.
In speaking with state officials, County Executive Vince Horrigan said he’s convinced legislation will pass.
“Quite frankly, I’m not real concerned. But I will say that sales tax is a major revenue source for Chautauqua County,” he said. “It keeps our property taxes on a path of reduction every year.”
Horrigan said roughly 20 percent of county’s sales tax revenue is paid by tourists.
In 2015, the sales tax rate in Chautauqua County stood at 7.5 percent. County legislators agreed that year to bump the rate to 8 percent to give the county more revenue to address a structural deficit. State lawmakers took the county’s request and required county legislators lower property taxes.
Of the 8 percent sales tax in Chautauqua County, 4 percent is distributed to the state. The base 3 percent is shared evenly between the county and municipalities.
Of the additional 1 percent, .5 percent is shared between the county and municipalities. The remaining .5 percent, which was enacted in 2015, is kept by the county and is not shared with local governments.
In all, 50 percent of Chautauqua County’s sales tax revenue heads to the state. Around 29.3 percent of the revenue stays with the county and approximately 20.6 percent is distributed to towns, villages and cities.
If legislation is passed, the county would be able to maintain an 8 percent sales tax until November 2019. The county would need to request an extension for an additional two years before the 2019 expiration. But that could change if legislation proposed by Cuomo is passed to eliminate local governments’ needing state approval every two years to continue their sales tax rates. The measure passed the Senate but didn’t get out of the Assembly.
Occupancy tax within the county would be extended to November 2019 if state legislators grant passage.