Courtesy of the Star-Gazette
Chemung County Executive Tom Santulli on Tuesday touted the success of a change in the way sales tax dollars are distributed, but not all municipal officials are happy with the results.
Santulli revealed a report from independent consultant Center for Governmental Research that showed the county and its municipalities — with the exception of the City of Elmira — remain strong financially since the county adjusted the formula a few years ago to keep more of the revenue.
Big Flats Town Supervisor Ed Fairbrother said the change prompted the town to think smarter about how it allocates tax dollars and praised county officials for help with shared services.
But Southport Town Supervisor David Sheen said his town, which has cut property taxes each year for the last for 14 years, will likely have to raise taxes in the near future to make up for the loss of sales tax dollars.
“The next two years of reporting will tell the actual end result of this sales tax redistribution plan,” Sheen cautioned.
Consumers who buy taxable goods in Chemung County pay an 8 percent sales tax on those purchases.
Half of that money goes to the state, and the other four percent comes back to the county.
The county takes 1 percent right off the top of that amount, and then shares the remaining 3 percent with its local governments.
Under the old formula, the county kept 65.6 percent of that amount, and the other 34.3 percent was distributed to the municipalities based on population.
Under the new formula, the county retains 74.2 percent of the local share, with the remaining 26.6 percent divided among the City of Elmira and the county’s 11 towns and five villages.
As one of the more populous municipalities in the county, the Town of Southport took one of the biggest hits, with its share of the sales tax pie dropping from 4.62 percent in 2014 to 3.08 percent in 2018.
And while the CGR report said most of the municipalities have healthy fund balances, Sheen said that probably won’t last long.
“As I see it, towns will be looking for tax increases as their reserves dry up,” he said. “Some towns, such as the Town of Southport, had a plan for reserves such as upgrades to buildings and infrastructures. These plans will not happen at a pace as they were intended to do.
“Again, as to the Town of Southport, we will be looking to increase taxes in the next year or two,” Sheen said. “We have controlled our expenses to a level that they need to be. Other revenues have dried up, which is a direct correlation to the reduction in sales tax.”
Other than the City of Elmira, which saw its share of sales tax revenues drop from 12.33 percent in 2014 to 9.05 percent in 2018, the biggest loser in the sales tax reshuffling was the Town of Horseheads.
The town saw its share of sales tax dollars decrease from 4.84 percent in 2014 to 3.2 percent in 2018.
In 2017, the Town of Horseheads imposed a property tax on residents for the first time in more than 30 years.
Town Supervisor Michael Edwards couldn’t be reached for comment Wednesday, but at the time the new property tax was announced, Edwards blamed the move on the sales tax redistribution.
The town expected to raise about $2 million through property taxes in 2017 to make up for the loss of sales tax revenue.
The changes also meant some pain for the Town of Big Flats, but Fairbrother said with some careful budgeting and the county’s help with a variety of shared services, the town has been able to adjust.
“We’re working around it. It’s something we have to live with,” he said. “I think what it’s done, if anything has come out about this, it is being responsible with citizen money. We’ve cut back personnel here, had to cut some of our programs, cut some park programs and reduced our expenses. But if we keep on that path now, we still do have a decent fund balance. We’re working it through.”
The Village of Horseheads has also learned to do without some things, but that isn’t necessarily a negative, said Mayor Louise McIntosh.
When the county started discussing changing the sales tax formula, village officials were worried how they would cope, but the transition — while not comfortable — has been successful, McIntosh said.
“We have cut spending substantially. The village manager has done an excellent job as have all the department heads and employees,” she said. “We’ve changed a lot of things, things we should have thought about before, but until you cut your budget you don’t think about. It has forced us to all look at other options. We want to do what’s best for all of our residents.
“It’s going to continue to be difficult, but in my opinion the (county) administration and Village of Horseheads are doing an excellent job of trying to find ways to share and trim expenses,” McIntosh said. “We’re trying to figure out how to work together to make things better for all of us and work with the county as well, to see what opportunities have we missed. There are always opportunities.”