With a sales tax distribution formula set to expire Dec. 31, Chemung County is proposing a renewed package with modifications designed to benefit the cash-strapped City of Elmira.
County Executive Tom Santulli presented a proposal to the county legislature’s budget committee on Tuesday evening.
The proposal would give the city more time to pay back money owed to the county as part of a shared services agreement.
Under the proposed modification, the city would be able to pay back a cumulative $2.7 million still owed to the county over an additional two years, with the last payment occurring in 2023.
That will give the city more cash up front to deal with some of its more pressing issues, and more time to come up with some long term solutions to its financial problems, Santulli said.
“We pay for shared services for highway and buildings and grounds. They settle at the end of the year,” he said. “We front them the money. What we will do is extend the payback period. By them paying us later and paying less now, they will have more disposable income (totaling $850,000) in 2019. “This helps them a lot but if they don’t change their operation, they won’t fix the problem,” Santulli cautioned. “This gives them the time. There are a lot of things they can do differently. They had better change their operations between now and then.”
Santulli, who is retiring at the end of the year, also said this will be a one-time offer. If the city doesn’t accept the terms, it will be up to the next county administration to address the issue, he said.
The county changed the distribution formula in 2015 to shift more sales tax revenues to county coffers to avert its own fiscal crisis, fueled primarily by rising Medicaid costs.
City officials have repeatedly said $4.2 million of audited losses in the city budget are a direct result of that loss of sales tax revenues, but Santulli and county Treasurer Joseph Sartori countered that when the shared services savings are factored in, the net loss to the city from the sales tax shift has only been slightly more than $100,000.
City Manager Mike Collins said the city is reserving judgment on the plan.
“I have reviewed the proposal with the mayor and council members,” Collins said. “While the city appreciates the county’s offer of financial assistance, the council desires to defer any decision until later in the year, recognizing the fact that the current sales tax agreement provides for an opportunity to renew or revise the agreement by Nov. 30, 2018.”
County officials say if the legislature approves, they will move ahead with the changes with or without the city’s blessing.
The modified formula would also provide additional revenue to the county’s other towns and villages.
Most of the county’s municipalities have still done well since the county made the change, and many of them actually lowered their own tax rates since then, according to Deputy County Executive Mike Krusen.
“I give our municipalities a great deal of credit for stepping up to meet these challenges, just as the county had to change our own operations,” Krusen said.
Santulli will present his final proposed county budget to the legislature shortly after election day in November.