Darien supervisor: County's 'fixed dollar amount' sales tax offer is a blow to towns and villages

If Genesee County cuts out or reduces the amount of sales tax revenue it distributes to its towns and villages, it likely will result in increased property taxes to those living in those communities.

That’s the view of Darien Town Supervisor David Hagelberger as he keeps a watchful eye on the situation while representing the Genesee Association of Municipalities on a committee working with Genesee County and City of Batavia leaders.

“Towns and villages are saying that if the county keeps all of the sales tax money, they would have no alternative but to raise local taxes to compensate,” Hagelberger said today. “If the county keeps all of it, you will see an increase in property taxes, slashing of services, depletion of fund balances or a combination thereof.”

Hagelberger said he is concerned over a couple of key issues:

-- That a new sales tax agreement between Genesee County and the City of Batavia does not include towns and villages – unlike the previous agreement that expires at the end of 2018;

-- That the County Legislature has indicated that it will forge separate agreements with the towns and villages based on a fixed dollar amount – and not a percentage that previously applied.

On Monday night, the Batavia City Council moved to vote on its agreement with the county at its next meeting on Sept. 24.

The new 40-year agreement calls for the city to receive its current 16 percent of the county’s share (Genesee County gets to keep half of the 8 percent sales tax, with the rest going to the state) through this year with provisions for that amount to grow in future years by a maximum of 2 percent per year.

If future sales tax growth exceeds 2 percent annually, the county will retain the amount above 2 percent, resulting in the city’s overall percentage share changing even though the city received additional funds. In any event, the City’s share will be no less than 14 percent for the remainder of the 40-year contract.

Meanwhile, towns and villages, which currently split 34 percent of the county’s share based on full taxable value of real property, are left out in the cold going forward, said Hagelberger, who reported that legislators on Wednesday night tabled voting on the agreement with the City of Batavia based on new information from the State Comptroller’s office.

“We have learned that the county has decided not to include us in the sales tax agreement, but will be replacing that with ‘Payment Distribution Agreements’ with the individual towns and villages,” he said. “Their proposal caps the sales tax distribution at the 2018 number – a fixed dollar amount and not a fixed percentage as in the past.”

What this means, according to Hagelberger, is that towns and villages would get the same dollar amount as they received in 2018 for the next 40 years. In the Town of Darien's case, for example, he projects sales tax revenue to exceed $1 million for this year.

“And we all know what happens with inflation and fixed incomes,” he said. “This is not good for towns and villages.”

County Manager Jay Gsell confirmed that the county is offering a fixed amount to towns and villages -- instead of a percentage – via what he termed a “Revenue Distribution Agreement.”

“The county is looking at building a new jail and spending $120 million on bridges and roads,” Gsell said. “Genesee is one of three counties in the state, by virtue of a 1938 statute, totally responsible for the maintenance, upkeep and replacements of bridges and culverts – anything going over a body of water that a vehicle can drive over.”

Gsell acknowledged that towns and villages may have to look at other revenue streams.

“Darien and Pembroke, for example, have zero town tax rates,” he said. “They have been budgeting a lion’s share through sales tax revenue.”

He also said the legislature is prepared to act on its agreement with the City of Batavia at its Sept. 26 meeting, noting that a procedural point brought up by the State Comptroller’s office forced the board to table it last night.

Hagelberger said that town supervisors are under a time crunch to submit their preliminary budgets later this month – fiscal plans that include property tax projections.

“We may not know in enough time to properly work up a budget. We have no guarantee if revenue from sales tax will go into the budget. It creates a lot of uncertainty,” he said, adding that any sales tax contract has to be approved by the State Comptroller’s office and that could impact the accuracy of final budgets which need to be completed by Nov. 28.

Hagelberger said he hopes the county will “clarify its position” soon and expects the issue to be a major part of the next GAM meeting on Sept. 20 at Genesee County Building 2 on West Main Street Road.