Extends until November 30, 2015, the authority of the county of Suffolk to impose an additional 1% sales and compensating use tax

BILL NUMBER:S5003

Title of bill

An act to amend the tax law, in relation to extending the authority of the county of Suffolk to impose an additional one percent of sales and compensating use tax

Purpose

To reauthorize Suffolk County's additional 1% sales tax for a two-year period ending on November 30, 2015.

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, 2015.

Justification

A county must secure state legislative approval each time it seeks to impose a sales tax rate above 3%. The State 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.

According to Suffolk County, the continuation of the county's additional 1% sales tax is a critical component of Suffolk County's daily operations. The importance of extending the 1% cannot be overstated, Each 1% produces approximately $238,000,000 in revenue. In 2012, the county's sales tax is projected to represent .55% of the general fund revenues In addition, Suffolk applies up to 3/8 of the 1% sales tax applied to police operations. If the county does not receive this authorization, either property taxes would have to be raised dramatically or 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. 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, 2013 General Fund property taxes would have to increase from $49 million to $332 million - an increase of 577%

Stated another way, if the 1% was not continued and property taxes were not increased, the County would be forced to cut the entire $283 million from the discretionary side of the budget. This would equate to the loss of more than 5,100 jobs, more than 79% of the current workforce.

Legislative history

New York State last granted authorization for Suffolk County to renew this component of the sale tax through Chapter 122 of the Laws of 2011.

Fiscal implications

None to the State

Local fiscal implications

Anticipated $283 million in revenue for Suffolk County.

Effective date

Immediately.