Extends until November 30, 2013, the authority of the county of Suffolk to impose an additional 1% sales and compensating use tax

Summary of provisions

The bill amends the Tax Law to extend Suffolk County's authorization to impose an additional 1% sales tax until November 30, 2013.

Justification

Currently, a county must secure state legislative approval each time it seeks to impose a sales tax rate above 3%. The State Legislature grants that authority to a county for a set period of time, usually one or two years. A county must then seek reauthorization from the State Legislature if the tax rate is to remain above the 3% limit.

The county's additional 1% sales tax remains a critical component of Suffolk County's daily operations. The importance of extending the 1% cannot be overstated. Each 1% produces approximately $263,000,000 in revenue. In fact, in 2011 the county's sales tax is projected to represent 53% of the general fund revenues. In addition, up to 3/8 of the 1% sales tax is applied to police operations. If the county does not receive this funding and property taxes are not raised, public safety could be jeopardized should the County need to reduce staff.

Counties are the primary providers of health and human services in New York State. This role has evolved over the years as New York expanded and adopted new programs and services, requiring counties to administer and finance them. Although Suffolk County has made tremendous progress in managing its share of mandated expenses, the dramatic growth of these programs over the past several years has placed an extraordinary strain on the County's Budget. Some of the most costly mandated programs for Suffolk County in 2011 will include the following:

o Gross mandated costs are projected to be approximately $1,108,693,148 in 2011;

o Mandated costs associated with the Education of Handicapped Children Program are projected to increase from $163,170,000 in 2009 to $168,070,000 in 2011;

o Mandated costs of programs provided by the Department of Social Services are projected to increase from $392,786,709 in 2009 to $456,332,257 in 2011.

Health care costs continue to rise at an alarming rate. Each year, the cost of providing medical services rises significantly above the cost of living. These increases have a dramatic effect on contracted

health services provided to the 47,000 Suffolk County employees, retirees and dependents. The increase is highlighted by the following:

o Gross employee medical and health expenditures are projected to increase from an actual $252,035,000 in 2009 to a projected $309,093,267 in 2011. This is a projected $57 million increase in expenditures.

In order to finance state and federal programs, counties have two basic revenue options: real property taxes or sales tax. Both revenue sources create problems for residents and businesses. However, the property tax is by far the least favored among taxpayers. While real property taxes overall remain significantly higher in Suffolk County than the rest of the nation, the County has been able to hold the line on its portion of the property tax. In order to replace the 1 % of revenue generated by the sales tax, 2011 General Fund property taxes would have to increase from $49 million to $312 million - an increase of more than 600%.

Stated another way, if the 1% was not continued and property taxes were not increased, the County would be forced to cut the entire $263 million from the discretionary side of the budget. This would equate to the loss of more than 5,100 jobs, more than 77% of the current AME workforce.

Legislative history

New York State last granted authorization for Suffolk County to renew this component of the sales tax through Chapter 283 of the Laws of 2009.

Fiscal implications

None to state.

Local fiscal implications

Anticipated $263 million in revenue for Suffolk County.

Effective date

This act shall take effect immediately.