taxes

Image: WEYI

The Chemung County Matters blog exists to help promote discussions about local issues. The views expressed by guest bloggers do not necessarily reflect my own, but are rather shared here in order to provide information and hopefully stimulate ideas.

Last night the Chemung County Legislature voted 14-2 in favor of a new sales tax plan, with only Peggy Woodard (District 8) and Rodney Strange (District 15) voting no.

The old plan has been under intense scrutiny since it was passed in 2013 for taking resources from the towns, villages and City of Elmira, causing many of them to suffer fiscal hardships.

Numerous candidates for local office have strenuously advocated for a change in the way sales tax monies are allocated between the county and its municipalities, something that is undoubtedly part of the decision of county leaders to change course.

However, the new plan has many problems as well.

Prior to the vote, I offered comments to the sitting legislature about new plan as it relates to the towns and villages. I intend to describe my position in a subsequent post within the next day or so.

John Burin, a former manager of the City of Elmira and current candidate for legislature in the 9th District, offered comments about the new plans as it relates to the city. A copy of his statement is shown below.

October 9, 2018

Honorable Legislators:

On September 24, 2018 I mailed each of you a letter with supporting documentation asking that you table this proposed plan to revise the reallocation of sales tax. I also referenced a process by which the 2019 county budget and budget message could move forward without the revised plan being in place. In my op ed on September 23, 2018, I pointed out in three months, newly elected officials should have the right to vote on this multi-year funding program.

I fully support a plan to reallocate sales tax revenue however, I believe the plan should be based on more than fund balances and debt. For example, the County apportionment of real property taxes creates an unintentional double taxation for certain services. These inequities, which are common to most of the towns/villages in varying degree, should be taken into consideration with the allocation of sales tax dollars. Additionally, from 2013 to 2018 Chemung County expenses increased $15 million dollars. During this same time period five county budgets were passed with deficits that required $10.5 million dollars of fund balance to close the gap. Future estimates of county revenues and expenses should be projected showing the impact of a sales tax reallocation plan.

In order for our county to realize desired social/economic growth, we must work together for a common cause. It was in this spirit that the City of Elmira allowed it’s Empire Zone Benefits to be used outside the City. The City’s willingness to share its zone in early 2000 produced economic benefits we still enjoy today and will continue to enjoy into the future.

According to the Chemung County Industrial Agency report, Project Information, December 31, 2009 the City of Elmira Empire Zone;

*Leveraged over $700 Million of private investment.

*Generated new property tax revenue for the County in excess of $900,000 and $1.7 million local and school tax revenue. Each year as property tax exemptions expire, the real property tax revenue increases and therefore current tax revenue is significantly greater.

*The City’s zone created 4,500 jobs and retained 10,000 jobs.

*14,500 jobs with an average salary of $20,000 generated $290 Million of payroll.

*$290 Million of payroll generates millions of sales tax dollars.

This is a billion dollar infusion of economic benefits. If not for the City of Elmira sharing its Empire Zone, Chemung County finances would be quite different today.

In June 2016, the New York State Financial Restructuring Board commented on the City of Elmira’s Bond Rating. “Prior to June 2015, the City had a bond rating of A2 with a negative outlook from Moody’s. On June 1st, 2015, Moody’s released a new rating for the City’s General Obligation bonds and lowered the rating by five notices – to Ba1 with a sustained negative outlook. This is non-investment grade (junk bond) rating from Moody’s.”

The reasons Moody’s cited for this severe reduction in the City’s credit rating are:

*Significant loss of revenue from the County sales tax sharing agreement;

*Health insurance overruns;

*Recurring general fund deficits

Moody’s will view new development positively however this plan that defers City debt will most likely not improve the City’s poor investment grade of bonds. The mixed use $14,000,000 development project in Elmira was granted a twenty year payment in lieu of tax agreement with the first four years being 100% exempt, after eleven years the project will pay 30% and in year twenty 60%. Property tax revenue from the affordable housing projects are restricted by law and proposed private developments have been given multi-year tax exemptions. It is for these reasons additional sales tax revenue to the City should be a part of tonight’s plan. Even if the revenue is restricted as to use, Moody’s may look favorably at a slight upgrade.

Sound business practice would suggest that this proposed sales tax allocation is deficient of solid reasoning for the suggested allocations. Over the next three months, a cohesive legislature working together should develop a plan that addresses the needs of the community keeping in mind the future needs of county government as well as the social and economic challenges inherent with high poverty levels, effective tax rates that stagnate real estate values and the ever increasing cost of providing efficient public safety services.

The plan before you tonight falls short in capturing these community needs. Lets take a step back, analyze the financial impact of what is being proposed and compare those findings to the needs of our community.

Thank you,

John J. Burin