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Onondaga County's sales tax formula hits towns hard

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A bigger share helps the county, but forces huge hikes in the suburbs.

2010-09-17-gw-nicotra007.JPGSalina Town Supervisor Mark Nicotra would see the county tax on his $85,000 home jump from $239 to $510 under the county executive's budget proposal. Legislators say that is unacceptable and plan "serious" spending cuts.

Salina Town Supervisor Mark Nicotra paid $239 in county property taxes this year on his modest, split-level home in the town’s Lyncourt section. Next year, that bill would more than double to $510 under the budget proposed by Onondaga County Executive Joanie Mahoney last week.

“It’s certainly distressing to see that,” he said when a reporter broke the news to him.

He won’t be the only distressed taxpayer in the county next year. County taxes on most homes in Syracuse’s suburbs would rise sharply — some, as in Salina, doubling or nearly doubling — if Mahoney’s proposed $1.19 billion spending plan is adopted by county lawmakers.

And since many homes are worth more than Nicotra’s $85,000 residence, the impact would be much greater on them. For example, a home in Clay worth $180,000 would see its county tax bill jump from $570 to $1,088.

“For the general public, it’s going to be a surprise,” Nicotra said.

When Mahoney presented her budget to the county Legislature Wednesday, she highlighted that the property tax levy — the money the county raises from property taxes — would fall slightly from $183.9 million to $180.8 million, and the county tax rate would dip from $7.04 per $100,000 of assessed value to $6.85 per $100,000 of assessed value.

But a closer look shows that the actual county tax bills in many towns would rise dramatically, mainly because of a change in the way the county divvies up its sales tax revenues.

That has many suburban legislators up in arms and vowing to slash tens of millions of dollars from the county executive’s spending plan — no matter how much it hurts. A doubling of county tax bills is simply not acceptable, especially during a time of high unemployment, they said.

“When we get done with it, my guess is we’ll see a big difference between the county executive’s budget and what we come up with,” said Legislator Robert Warner, R-Van Buren.

“We really need to go back to the drawing board and come up with some serious spending decreases,” said Casey Jordan, R-Clay, chairman of the Legislature’s Ways & Means Committee.

The new revenue-sharing formula, approved by lawmakers earlier this year, will give the county’s 19 towns just one-third of their previous allocation of sales tax money. That change means the county is keeping $47 million that the towns would have gotten.

In past years, most towns used their share of sales tax dollars to reduce their constituents’ county property taxes. Since they will have a lot less money to do that next year, county taxes in the towns would rise a lot under Mahoney’s plan — even though the county’s total property tax levy would be slightly smaller.

County tax bills in Syracuse and all but one of the county’s 15 villages would be mostly unaffected because those communities have always taken their sales tax allocations in cash, not as a credit against county property taxes.

But the city and villages will feel the pain, too. They will not set their own tax rates until later this year, but those tax bills probably will go up.

And, in the city, a small decline in its county tax rate will be more than offset by increases in county usage charges for such things as libraries, the Justice Center jail, the new criminal courthouse and county planning agency services. When those charges are figured in, the city will see its payments to the county rise by $2.4 million, or 5.2 percent.

Another change bit some towns, too. The county will allocate sales tax money based on the total valuation of property in each municipality, just as it apportions the tax levy. Before, it divided sales tax dollars based on population. That was good for towns like Salina and Clay, which have large populations but modest property values, and bad for richer towns like Skaneateles and Manlius, which have smaller populations but higher home prices.

Under the new formula, towns with lower property values will see bigger hits on their county tax bills than towns with higher property values.

“It’s kind of a double whammy,” Nicotra said.

Another complication: Seven towns — DeWitt, LaFayette, Lysander, Onondaga, Otisco, Pompey and Van Buren — opted to take all or a greater portions of their now-smaller sales tax allocations in cash next year, instead of using it, as they did in previous years, to lower the county property taxes in their towns.

The infusion of sales tax money into their budgets should help keep their town taxes down, but it will increase county tax bills in those towns even more than they otherwise would rise.

If DeWitt, for example, had not chosen to take all of its sales tax share in cash, the county tax on a $100,000 house there would be rising from $522 to $664, instead of to $711. In Van Buren, it would be rising from $315 to $684, instead of $741. And in Lysander, it would be rising from $414 to $620, instead of $720.

More rough road is ahead. In 2012, the county will share even less of its sales tax revenues, and in 2013, it won’t share any at all.

Amid all the number-crunching and shifting between county and town taxes, the bottom line is this: The cost of local government is going up significantly next year.

Mahoney said increases in the cost of Medicaid, pensions, employee wages and a host of state mandates and other expenses beyond local control will force the county to spend most of its newfound sales tax money, directing only $3.1 million toward reducing the levy.

Without the sales tax grab, the county would have been looking at a $60 million budget gap that would have required a 30 percent hike in its property tax levy, she said.

Mahoney said legislators knew of that potential budget gap and the impact of the change in the revenue-sharing formula when they approved it earlier this year.

“It’s disingenuous for them to suggest they’re surprised now, because they had all that information,” she said.

She said the revenue shift, as painful as it will be for many taxpayers, was a good idea because it will help people see the actual cost of government services and has already prompted moves by some towns to consolidate work.

“The true cost of government has been hidden with these convoluted systems of credits and some people taking it in cash,” she said. “Now when people see what they are spending to operate all these different governments in Onondaga County, you’re giving a lot of power to people to lend their voice to the conversation about sharing services.”

Mahoney said she has “gone bare bones” on all of the spending she can control, noting there will be 161 fewer workers on the county payroll next year, due to early retirements and up to 10 planned layoffs. However, if legislators find more ways to cut taxes, she will support them as long as they do not raid the county’s fund balance or use one-shot revenues, she said.

“I think they’re going to find there are very few opportunities to cut more out of this,” she said.

--Contact Rick Moriarty at rmoriarty@syracuse.com or (315) 470-3148.


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