The impact of Chemung County’s 2013 decision to redirect sales tax revenue from the City of Elmira and other municipalities into its own coffers is proving to be an integral part of the discussion of how to address the City’s dire fiscal situation, as well the impact being felt by local towns and villages.
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, Chemung County 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.
The restructuring plan changed that ratio drastically, particularly in relation to the City of Elmira. Indeed, the split for 2017 directs approximately 70% of all sales tax revenue to Chemung County with only about 10% left for the City.
There was significant opposition to the sales tax redistribution plan in 2013 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.
Last December the City of Elmira announced it was proposing a 17% increase in property taxes in order to address its budget crisis, highlighted by a $2,500,000 budget shortfall.
This type of economic stress is not isolated to the City of Elmira. 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.
Despite these financial woes, Chemung County has not raised taxes in 13 years.
Today the Star Gazette reported that the Center for Governmental Research (CGR), an entity hired in 2017 by Chemung County to review the impact of the 2013 sales tax redistribution, has issued a report (article found here.)
The article quoted Chemung County Executive Tom Santilli as stating, “The fiscal health of the county is for the most part good. The villages of Horseheads and Elmira Heights are starting to feel the pain. Elmira has hit the iceberg and the ship is going down.” According to Santulli, any losses felt by the City of Elmira and other municipalities are offset by revenues gained through shared services agreements.
However, the article also quoted Elmira Mayor Dan Mandell, who strongly opposed those conclusions.
“From 2014 to 2018, our share of sales tax went from 12.33 percent to 9.05 percent. Our actual loss, according to our chamberlain, is about $5.1 million in sales tax revenue,” Mandell said. “The bottom line is, shared services do not offset our loss. We do save money, but for the county executive to go on a tirade about it is unacceptable and immature, but typical.”
“Our sales tax numbers aren’t deceitful. They are what they are,” Mandell continued. “Shared services save us money, but the impact of (loss of) sales tax revenue hurts us.”
The bottom line is that the City of Elmira’s economic health is integral to the prosperity of Chemung County. Elmira is the County seat, the home of our downtown, and the place with the most potential for economic development.
And, its problems are not going away anytime soon. We need to come together as a community – not the County separate and apart from the City – in order to discover real solutions while we still have the chance to bring about meaningful change.