The decision to delay for a year a new sales tax distribution formula for Cortland County municipalities will only delay the inevitable financial harm to towns and villages, some of their leaders said Tuesday.
However, negotiators with the county and the city of Cortland will continue talks this week.
The city of Cortland Common Council ended the existing 10-year formula this year, prompting negotiations to replace the balance of the agreement that was to expire at the end of 2028. The city pressed for additional funds, in large part because 60 percent of the land within its boundaries is tax exempt.
Meanwhile, the county during negotiations also has moved to increase its share of sales tax revenue. Together that would reduce the allocations to towns and villages by half, Homer Village Mayor Darren “Hal” McCabe said Tuesday.
“The delay is nice but they’re still going to go through with it, which is the problem,” McCabe said. “They stretched it out a little further. At the end of the day, I’m still going to have to raise taxes 40% in the village or significantly cut spending.”
In a notice posted on its website, in which the county’s financial practices and tax burden were bashed, the village noted it plans to survey residents to help determine spending priorities, in light of the expected cut in sales tax revenue.
The reduction comes at a particularly bad time as Homer plans improvements funded by the state’s $10 million Downtown Revitalization Initiative, McCabe said. The village will not have funds for matching grants or hiring grant writers.
“This is going to be such a devastating blow to this county,” he said. “The county legislators cannot seem to grasp that. They (legislators) have a spending problem. … Our tax rate is the third highest in the state and we spend the ninth most per capita in the state.” “We have time to try to make up for that – that’s the only good thing about it,” said Joseph Nauseef, the McGraw village mayor and a county legislator. “It will be implemented over six years. I think they did the right thing by pulling it back. It would have really killed some people.”
Six years into the new agreement, McGraw would receive less than it gets now, Nauseef said. He said the village would have to be even more careful in planning its spending and look to share more services with neighboring municipalities.
According to the existing 10-year agreement, which began at the start of 2019, the county took for five years $1.5 million of the sales tax revenue off the top, then gets 54% of the rest. The city gets 17.75% and towns and villages get 28.25%, for the first five years of the agreement.
In the second five years, the county would get 55% of the revenue. The city’s share would have gone down to 17.38% and the towns and villages would have been reduced to 27.62%. The county estimates it will collect and share $40 million in 2025.
Cortland Mayor Scott Steve said earlier this year that the city would consider alternative sales tax revenue-sharing methods, such as pre-empting, in which the city would keep all of the sales tax revenue generated within its borders.
The towns and villages are not parties to the sales tax negotiations because the county is not obligated to give them any of the revenue, but the has the right to pre-empt, Steve said. The arrangement for negotiations goes back decades.
Steve said he is optimistic that the sides would reach an agreement. “I have to be optimistic. I should be optimistic,” he said. “As far as I’m concerned, we did have it resolved.”
The discussion will resume on Thursday, he said. He said, again, that the issue could be resolved, but it will be a surprise if it ends with everyone happy.
“If all three sides walk away (from the discussion) with their noses slightly bent out of shape,” he said. “That will probably be a good thing.”
