Extends expiration of authorization of county of Chautauqua to impose additional 1/2% sales and use taxes until November 30, 2017

Summary of specific provisions

Section 1 amends section 1210 of the tax law to extend the existing authority for Chautauqua County to extend the existing 11 percent additional sales tax for an additional two year period, in the event that the County does not enact a full 1% additional tax rate.

Sections 2 amends section 1210 of the tax law to provide authorization for enactment of a 1% rate under Section 1210 of the tax law for the periods December 1, 2015- November 30, 2016 and for the periods December 1, 2015-November 30, 2016.

Section 3 and 4 amends section 1224 of the tax law to further authorize the imposition of the 1% additional tax.

Section 5 amends section 1224 of the tax law to further continue the existing authorization to impose the additional 1% sales tax.

Section 6 amends section 1262-o of the tax law to continue the distribution of the 1/2 % sales tax revenue as previously specified should the County fail to enact the additional 1 % sales tax.

Section 7 amends section 1262-o of the tax law to provide that should Chautauqua County enact the additional 1% sales tax; the County shall allocate 3/20 of the net collections of the additional 1% additional tax to the cities, towns, and villages in the county on the basis of their respective populations. Subsequently the County shall distribute the remainder to pay for the County's Medicaid and other expenses required by law; to pay for local and bridge projects; to pay for capital projects and capital project debts not paid by the MRT; and to deposit into a reserve fund for bonded indebtedness. This is the same proportional distribution as previously specified for the additional sales tax.

Section 7-a provides for the disposition of sales tax revenue for the period December 1, 2016 - November 30, 2017 should the County fail to meet the conditions imposed for extending the 1% additional sales tax reduction for the 2017 tax year.

Section 8 provides that the authority to impose the additional one percent sales tax for both the 2016 tax year and the 2017 tax year is conditional upon the County budget resulting in a real property tax levy which is a minimum of 3% less than the County's 2015 real property tax levy.

Section 8-a provides that the county must mail the required notice that they have enacted the 1% sales tax by November 1, 2015 and November 1,2016, respectively, for each tax year.

Section 9- imposes an immediate effective date with certain qualifying section repeals, and certain notice requirement.

Justification

Chautauqua County has requested the imposition of an additional 1% sales tax pursuant to a resolution passed by the County legislature on March 25, 2015. In the resolution the County cites the need to increase their sales tax due to the fact that the County has been suffering a revenue decline since 2006 when the County had their additional sales tax rate reduced from 1.25% to .5% In addition to the reduction in the prior additional sales tax rate, the County has cited the cost of the "hold harmless" requirement of the residential energy exemption (currently $4 million per year) coupled with increases in mandated expenses, such as Medicaid (increased 13% in 10 years) and public safety( 13% increase in 10 years) as causing the county to consistently dip into their fund balance to keep the property tax levy in check. Without the requested legislation, the County's fund balance will have dropped from $29 million to at the end of 2007 to a projected fund balance of $5.7 million at the end of 2016, which is less than the level of fund balance required by the State Comptroller.

The County has implemented cost savings measures which include reducing the size of county government by 270 employees in the last 5 years, reductions in employees' benefits and social services, and privatization of the county nursing home. Even factoring these substantial cuts, the County's independent deficit reduction commission has concluded that any further reductions in non- mandated services would constitute extreme measures and affect the Chautauqua County's quality of life. The County is one of the two counties in Western NY with a sales tax rate currently less than 8%.

The 1% tax increase will result in an anticipate $7.78 million more per year than the current .5% tax rate. The legislation provides that the imposition of the additional tax rate is conditional upon the County's adoption of a real property tax reduction of at least 3% from the 2015 tax levy, so that real property taxpayers will see a reduced tax rate in 2016, and no further increase in 2017.

Legislative history

New Bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately,subject to provisions.