Extends from November 30, 2010 to November 30, 2011, the expiration of the authority of the county of Chautauqua to impose an additional 3/4% sales and use taxes

BILL NUMBER:S3301B

Title of bill

An act to amend the tax law, in relation to authorizing the county of Chautauqua to impose an additional one-half of one percent or three- quarters of one percent sales and compensating use taxes

Purpose

The purpose of this legislation is to authorize the county of Chautauqua to impose an additional one-half or three-quarters of one percent sales and compensating use taxes.

Summary of provisions

Clause 38 of subparagraph (i) of the opening paragraph of section 1210 of the tax law, as amended by chapter 174 of the laws of 2009 is amended.

Justification

In 2005, Chautauqua County requested authorization to impose an addi- tional sales tax of 1.25% to be used for paying the escalating mandated cost of Medicaid and other expenses. In 2006, citing the State's passage of Medicaid cap legislation the county requested that the additional tax rate be lowered to 1%. In 2007, authorization was given to the county to continue the additional sales tax at a reduced rate of .75%. In 2009, authorization was given to the county to continue the additional sales tax at a reduced rate of .75%, until November 30, 2010, at which time it would be reduced to a rate of .50%. The County has requested this legis- lation be enacted to continue the .75% additional sales tax rate until November 30, 2011.

This legislation continues Chautauqua County's additional sale tax as provided for at a reduced rate of .75% and the elimination of the Coun- ty's sales tax on home heating fuels from December 1, 2010, to November 30, 2011. The legislation also provides for the allocation of one-fifth of the net collections from the additional three-quarters of one percent sales tax to the municipalities based upon population.

The bill has been amended to ensure that the .50% provision of current law would not be nullified if it is passed after October 31, 2010. This provision is necessary because after October 31, 2010, should the addi- tional .75% authorization be passed, it would conflict with the state's first sales tax quarter. The county must therefore be given the ability to impose either one of the two rates of .50% or .75%. If the legis- lation were to be adopted authorizing just the .75% after October 31, 2010, the county would lose all tax revenue for a whole sales tax quar- ter. This is because, according to the Department of Taxation and Finance there are thirty-day advance notice requirements for them to change their rate, which they would not be able to meet. Without an option to remain at the current rate of .50% for the first sales tax quarter, the county would be locked into the first sales tax quarter at essentially 0% additional sales tax rate. This provision allows them to

continue at the current rate of .50% for the remaining of the first sales tax quarter, and then to begin the .75% rate at the start of the second sales tax quarter.

Legislative history

This would amend the provisions of Chapter 174 of the Laws of 2009 to continue the county's additional authorized sales tax at a reduced rate of .75% for one additional year from December 1, 2010 to November 30, 2011.

Fiscal implications

This legislation will have no fiscal implications for the State and the county will receive additional funds in sales tax revenue. Consumers of home heating fuel will continue to save in energy costs due to the elim- ination of the county sales tax on heating fuels.

Effective date

This act shall take effect immediately.