MASSENA The villages Board of Trustees voted 3-2 last week to support home-rule legislation that would allow the St. Lawrence County Board of Legislators to consider a possible sales tax increase in the wake of a multi-million dollar shortfall facing the county government, a move that would give the county board the authority to increase its share of the sales tax from 3 percent to 4 percent.
Support for home-rule legislation does not necessarily mean the county will be able to raise its sales tax from 3 percent to 4 percent, on top of the states 4 percent sales tax. It would have to be approved by the state Legislature and signed by Gov. Andrew M. Cuomo.
State Sens. Patricia A. Ritchie, R-Heuvelton, and Joseph A. Griffo, R-Rome, have both been cool to the sales tax hike plan and their support is critical to moving the measure through the state Senate. They have also suggested Gov. Cuomo would be unlikely to sign legislation calling for a tax increase.
The home-rule resolution on the agenda at town and village board meetings in recent weeks is an effort to show the countys support for the increase.
Mayor James F. Hidy and Trustees Patricia K. Trish Wilson and Timothy J. Ahlfeld voted in support of the measure; Trustees Albert C. Herb Deshaies and Francis J. Carvel voted against it.
County Legislators Gregory M. Paquin, D-Massena, and Jonathan Putney, D-Waddington, shared the rationale for the proposed sales tax increase. Village board members had said earlier this month they wanted additional information before voting on the resolution.
The reality is were in a tough spot, Mr. Putney said. There are a lot of things we shouldnt have to be doing now. (But) were up against the wall now.
To help reduce an initially projected 20 percent tax levy increase, legislators first broached keeping one-third of the sales tax traditionally distributed to towns and villages, an idea universally panned.
A later proposal called for the county to keep 10 percent of the sales tax revenues that would normally go to towns and villages. The village of Massena receives approximately $1 million in sales tax revenues each year.
County lawmakers approved a 2013 budget that increases property taxes by 14.45 percent Monday.
The countys tax rate at full value will climb from $8.72 per $1,000 of assessed property value to $9.81 per $1,000.
Giving an example of the impact, County Administrator Karen M. St. Hilaire has said the owner of a $100,000 home at full value will pay $117 more next year in county property taxes.
With no sales tax increase and no sales tax redistribution, the county is projecting double-digit property tax increases for the next five years. A sales tax increase from 3 percent to 4 percent could mean property tax cuts over the same period along with regrowth of the fund balance, county officials have suggested.
Mr. Paquin said with the additional revenue that would be generated by the sales tax hike, county officials project next year would call for a 3 percent tax levy increase followed by decreases of 5 percent, 13 percent and 10 percent in the following three years.
The true value tax rate would go down during that period of time, and we could build our fund balance back up to $10.6 million during that same time, he told village board members.
Mr. Putney noted one advantage to a sales tax increase, as opposed to a property tax increase, is that a number of people outside the community such as tourists, Canadians and college students contribute to the revenue.
We have the opportunity to take advantage of the Canada effect and college students, he said.
The legislators also noted that unless more revenue is generated, the county will have to cut nonmandated services. Mr. Paquin noted since 2010, St. Lawrence County has reduced its work force by 137 positions.
If we dont get the sales tax increase, I do not see how we can keep the county road patrol. I do not see how we can keep the chemical dependency program, (or anything else) thats not mandated, Mr. Paquin said.
When you talk about services, people provide the service, Mr. Hidy added. So its ultimately going to help a struggling county.
Joseph A. Macaulay, a former village trustee and one of several Massena residents who addressed the board on the issue, expressed disappointment that neither the town nor village will receive a portion of the additional sales tax revenue if the increase is passed.
What advantage to the village is there for the government to support this 1 percent increase? Mr. Macaulay asked.
Youre going to do one of two things: Youre either going to pay a higher village tax bill or a higher county tax bill, Mr. Ahlfeld acknowledged.
Mr. Putney also noted St. Lawrence County shares a larger portion of its sales tax revenue than most counties in the state.
Frankly, were already one of the most generous counties in currently giving our sales tax funds back to you, he said.
Nobody wants to raise taxes, but the reality is we are going to need revenue. It (sales tax) seems like an intelligent choice compared to raising property taxes, he added.
The county lawmakers and village officials said they didnt have a firm understanding of the impact the sales tax increase would have on the countys major employers, including Alcoa.
Former Legislator R. Shawn Gray said when he had been in office, a high-ranking Alcoa official told him a 1 percent sales tax raise was the equivalent of a 30 percent property tax hike for Massenas largest employer.
Mr. Paquin said he had been led to believe a 1 percent sales tax hike would be the equivalent of a 1 percent property tax increase for Alcoa.
Its a conversation we need to have with them again before we take action, he said.
Several village officials and residents criticized the proposed effort on the basis that sales tax is sometimes seen as a regressive tax. That is because people who earn less, and have to spend the majority of their income, could end up paying more in sales tax than individuals with higher incomes, who might be able to invest more of what they earn.
Others added a sales tax increase has not worked well in other counties.
If you look at just about every county that has a higher sales tax than St. Lawrence County, theyre in trouble, Mr. Carvel said.
Mr. Paquin acknowledged that if the increase is passed, the county cannot afford to be frivolous with the added revenue. He also added the county has the power to lower sales tax should the county be in a strong enough position to do so years from now.
We cant look at this as a windfall, Mr. Paquin said. Its got to be something we have to use to sustain a lower tax rate. We cant just start spending wildly.