2018 is poised to be an important year for Chemung County.
As the Finger Lakes region continues to develop, Chemung County has the potential for significant gains – but only if we openly acknowledge the unique obstacles we face and work together in a transparent way to discover innovative solutions.
We undoubtedly have the collective brainpower and desire to make our community shine. The list below represents some of the pressing fiscal issues we face. If it is incomplete – or in any way inaccurate – please join the discussion here or on social media. The pathway toward meaningful change starts with an honest discussion.
The First Arena
What to do about a portion of the debt associated with Elmira’s First Arena is a matter that will be taken up by the Chemung County Legislature during the first few months of 2018.
In June, 2016 the Chemung County Industrial Development Agency (CCIDA) purchased the First Arena despite significant yearly deficits in an attempt to facilitate a sale to a private buyer. A description about the history of the Arena’s ownership is found here.
At roughly the same time, an entity called Twin Tiers Economic Development (T.T.E.D.) was created and assumed ownership of the Elmira Jackals hockey team. The team was increasingly unable to meet its financial obligations to private vendors, resulting in more than $700,000 of outstanding debt at the conclusion of its final season in 2017.
Chemung County officials have repeatedly pledged that no revenue generated through property tax or sales tax would be used toward operation of the Arena, limiting the options for dealing with this problem unless, as former Elmira Mayor James Hare suggested in this Your Turn piece last year, the County reconsiders its pledge.
One option on the table that will be taken up soon is a proposal by Chemung County Executive Tom Santulli and Deputy Chemung County Executive Mike Krusen to allocate $150,000 of monies collected through room tax (also referred to as “Hotel and Motel Occupancy Tax”) over the next three years to pay off a total of $450,000 of the Jackals’ debt and write off whatever amount remains. This money would be channeled through the Chemung County Chamber of Commerce, as room tax money must be used to promote tourism, something that is arguably enhanced by having a downtown Arena. Stories from WETM-TV, the Star Gazette and WENY-TV detailing the proposal are found here, here and here,
Muddying the waters, however, was the recent allocation of $150,000 from Chemung County’s operational budget to the Chamber of Commerce to make sure the Chamber remains fully funded in the event the Legislature agrees to use room tax money to pay off the the Jackals debts, with the associated recommendation that the Chamber be given $150,000 for an additional two years to cover the room tax money that will be used to pay off the Jackals’ debt. In (at least the recent) past, the Chamber has not received money from the County’s operational budget, but instead was funded only through room tax collections. The allocation to the Chamber of Commerce in the 2018 Chemung County Budget is found here on page 49.
At a Legislative Budget Workshop I attended in December, Krusen explained that the operational budget would be amended to remove the $150,000 payment to the Chamber of Commerce if the Legislature votes against allowing room tax money to be used to pay off the Jackals private debts.
This is a difficult issue that only addresses a small part of the problem. Finding a buyer for the Arena is clearly a good thing, but using taxpayer money to bring about a sale is likely to bring about many questions and a great deal of public discussion in the near future, as can be seen here following WETM #Questionoftheday poll on the matter.
Sales Tax Redistribution, Shared Services and the CGR Report
In 2013 the Chemung County Legislature voted to approve a controversial measure called the “Chemung County Financial Restructuring Plan” to redistribute the way sales tax revenue is allocated in Chemung County.
Prior to 2013, county government received 50% of all sales tax revenue, and the remainder was split among the City of Elmira and the remaining local towns and villages. However, the redistribution plan allowed an increasing percentage of the money collected through sales tax to go to Chemung County, with a equal reduction in revenue left for the other municipalities. This is a link to a powerpoint presentation given by Chemung County Administration to the Legislature prior to a vote on the the measure: Sales Tax and Financial Restructuring Plan.
The redistribution plan was met with strong opposition by the City of Elmira as well as a group of local leaders called the Rural Association of Mayors and Supervisors (“RAMS”.) Together they argued that taking sales tax revenue would cause local municipalities to raise taxes, cut services – or both – as the graph below shows how much they each stood to lose.
A link to a Star Gazette article from 2014 outlining various positions on the matter can be found here.
A few weeks ago I wrote a blog post about the negative affect of sales tax redistribution on the City of Elmira and other local municipalities, found here. Notably, the City of Elmira recently proposed a 17% tax increase, both the Village and Town of Horseheads levied taxes in 2017 for the first time in more than 30 years, the Village of Van Etten voted last month to dissolve, and most other local municipalities face critical decisions of how to continue to cope with dwindling resources.
On the other hand, Chemung County Deputy Executive Mike Krusen argues that any detriment to the City of Elmira or other municipalities is offset by shared services arrangements the County has brought about in recent years. Specifically, at a December press conference where Elmira’s 2018 proposed budget was announced, Krusen stated that “the relief the county provided the city exceeds what the city lost in sales tax” because “the sales tax formula changes were exceeded by shared services and savings in health insurance costs.” A Star Gazette article describing the press conference is found here.
A report expected to be released in early 2018 from the Center for Governmental Research (“CGR”) will hopefully provide meaningful economic feedback and metrics by which to evaluate the impacts of both the 2013 sales tax redistribution plan and shared services arrangements developed during that time, helping local leaders and the public figure out how to ease some of the growing fiscal burden currently faced by many local municipalities. An article describing the process using CGR can be found here.
The City of Elmira’s Fiscal Health
Closely related to sales tax redistribution and shared services is the fiscal health of the City of Elmira.
As mentioned above, Elmira recently proposed a 17% tax increase, something that has captured a lot of public attention as, if passed, the measure will result in Elmira being one of New York’s highest taxed cities.
And, a report in today’s Star Gazette, found here, shows Elmira has lost 2,300 jobs since 2008 – including 700 last year alone. These numbers stand in stark contrast to nearby Tompkins County that gained 7,900 jobs over the same period.
According to Elmira City Manager Mike Collins, budget workshops will be held with the City Council from 1 to 4 p.m. on January 4 and 5, and from 10 a.m. to 2 p.m. on January 11. The workshops will be held in the Law Library on the third floor of Elmira City Hall. They are are open to the public, but public comments will not be allowed. The council will hold a public hearing at a later date to enable residents to provide input on the budget. Additional details were provided in a recent article by the Star Gazette, found here.
It has been argued that the City’s problems are separate from matters affecting Chemung County, though this is a distinction without merit. Elmira is the county seat, and any path forward must include steps to resolve Elmira’s serious economic problems.
Jim Waters, an Elmira City Councilman, formed a group last year called the “Committee for Elmira”. According to a statement made by the group in December:
The Committee For Elmira recognizes the importance of a positive, forward-thinking relationship between the County and the City. What is missing between the two is a trusted dialogue with open communication where motives are clear and proposals are detailed. We recognize being a government official can wear on patience but patience is exactly what is needed! Often the two entities are reacting to each other rather than adopting a proactive approach; both need to recognize they are not on different sides but on the same, working toward the common goal of attracting jobs, growth, and sustainable economic vitality. None of these goals will be achieved without developing that relationship.
A copy of the Committee’s full statement can be found here.
2018 is a critical year in the development of the relationship between the City of Elmira and Chemung County, as both sides need to find a way to come together in recognition that increased cooperation benefits everyone.
Chemung County’s Fiscal Health
The fiscal health of Chemung County itself will also be an important matter for discussion in the upcoming months.
2018 is projected to be the 13th consecutive year that the county has been able to either lower or maintain the tax rate for its residents.
But, at a recent county budget workshop, Budget Director Steve Hoover pointed out that Chemung County’s reserves decreased from $30 million in 2011 to a projected level of just $19 million in 2018, and are expected to drop below $10 million by 2021 if no changes are made to the way our county does business. Reserves of less than $10 million could threaten Chemung County’s bond rating, making it harder and more expensive for the county to borrow money. The decrease in reserves stems from an average yearly budget deficit of approximately $2 million that started in 2011.
Hoover further explained that Chemung County’s debt has risen by 25%, from roughly $40 million in 1999 to over $50 million in 2017, as its expenditures have far outpaced revenues year after year after year.
Dwindling reserves along with a ballooning debt is unquestionably cause for very serious concern, and becomes even more serious when coupled with the economic hardships faced by local municipalities described above. A discussion of how go about fixing these problems rather than just transferring them among various levels of government is something that needs to be undertaken now.
Impact of State and Federal Actions
Of course, Chemung County does not exist in a bubble.
With 87% of our county’s budget going toward state mandates, any critique of the way we do business must also acknowledge the tremendous burden New York state places on local government.
In his opening narrative to Chemung County’s 2018 budget, County Executive Tom Santulli stated:
The State of New York continues to blame the high cost of property taxes on the fact that there is too much local government in our State. The Governor has mandated that counties and our municipalities annually submit shared service or consolidation plans to the State to show how local government will reduce operating costs. Their contention is that with less local government there will be fewer costs and, therefore, more savings for the taxpayer, which will in turn create a more positive financial environment to improve our business climate and stop the migration of New York residents to other States. There certainly is some validation in that statement, but it is only a minor solution to a much larger fiscal problem. If attracting new business and people to New York State is to be achieved, the primary culprit of excessive property taxes needs to be addressed, and that culprit is clearly unfunded mandates on county government. Of the nearly $6 billion in property taxes that are collected by counties on an annual basis, nearly $4.6 billion of that number is sent to the State to pay for unfunded mandates. I also believe that if State government eliminated these unfunded mandates, County property taxes could be nearly eliminated.
A copy of the 2018 Chemung County Budget is found here.
And, recent actions by the federal government must be considered as well. New tax legislation will arguably have a significant impact on the state revenue stream, and proposed changes to our healthcare system could place increased pressure on states to fund programs such as Medicaid, resulting in even greater burdens on county governments and, in turn, taxpayers.
There are no easy answers to how the county, state and federal governments can best work together – just as the interplay between county and local municipalities is riddled with complexities. But, as with all of the issues highlighted in this post, the discovery of solutions starts with an open discussion of the issues.
Change in Leadership
Finally, it is clear there will be some type of change in leadership in Chemung County by the end of 2018.
For the first time since 2002, there will not be an incumbent in the race for County Executive. Deputy County Executive Mike Krusen has already announced his intention to run for the position (a link to his announcement is found here), and others may join the race as the year continues. Additionally, several legislative races races may be contested, resulting in many new opportunities for discussions of the issues as elections often are a great catalyst for public discourse.
The problems facing Chemung County are not going away anytime soon, but the more we work together toward solutions, the better off we all will be.
– Christina Sonsire