Walmart construction delay to cost Gloversville sales tax revenue

PHOTOGRAPHER: Jim McGuire

Wal-Mart’s decision to delay construction of its planned Gloversville Supercenter — from this fall until April — will have significant financial consequences for the city.

The $15.3 million 2011 budget proposal devised by Mayor Dayton King and Finance Commissioner Bruce Van Genderen relies on $200,000 in retail sales tax revenue and $100,000 in sales tax on construction materials used for the project.

Though the sales tax on materials will likely start rolling in next year, Van Genderen said it appears city officials will have to find alternative measures to replace the sales tax on merchandise originally anticipated to be sold at the new store during the final two months of 2011.

Under the original construction schedule, there was to be a groundbreaking this fall and a store opening as early as Oct. 15 of next year — in time for the holiday shopping season.

Last week, a Wal-Mart lawyer informed city officials that groundbreaking will be delayed until April, apparently pushing the store opening back to 2012. King said the lawyer attributed the delay to failure to get a permit from the Army Corps of Engineers to alter wetlands on the 40-acre site and to a tenant remaining in a house owned by James Curtin, the individual selling the site to Wal-Mart.

Curtin said last week the tenant has vacated the premises, but Wal-Mart officials have not responded to telephone calls seeking more details about the delay. Curtin said the two sides closed on the property last week.

Van Genderen said the delay adds one more challenge to the task of balancing the 2011 budget.

He said he and King learned of the delay last week and have yet to sit down to discuss what appears to be a resulting $200,000 budget gap.

But, Van Genderen noted, the lost Wal-Mart revenue is just one of a number of budget issues and options the Common Council will have to evaluate as it conducts budget deliberations until the Dec. 10 deadline to adopt a budget.

King’s proposal to generate $760,000 next year by charging a $2 per-bag garbage fee is already somewhat controversial.

It was the largest in a number of proposals he offered last week to close a $1.2 million budget gap projected for 2011.

Van Genderen said the loss of $200,000 in this situation is significant for the city.

Though large sums were appropriated over the last two years from the city’s surplus to minimize tax increases, the 2011 proposal does not touch what is expected to be a $400,000 surplus left at the end of this year.

Van Genderen said the surplus, which is projected under the budget scenario to stand at $400,000 again at the close of 2011, gives the city an emergency fund for unexpected expenses.

Already there’s a an expense of unknown size on the horizon: The city has been notified to expect a 2011 increase in employee health insurance premiums of anywhere from 12 to 20 percent. He said there is speculation that some of the increase next year and in ensuing years will be attributable to health insurance companies passing on new costs from the recent health care legislation.