The City Council is poised to approve an amendment to the City Charter that will transfer approximately $1.5 million in delinquent tax liabilities to the county.
The charter change would remove the legal requirement that the city make the county whole for uncollected state and county taxes from city residents during any month. Instead, the city would pay the county only what it has collected on the last day of each month. Delinquent county taxes total approximately $1.5 million annually. The amendment does not require approval by the state Legislature.
The change affects a 1906 provision in the charter that council members said the city can no longer afford to honor. “It would be great for the city’s finances if this could be accomplished. Every million dollars counts on a $76 million budget,” said council member Barbara Blanchard.
The city also wants to absolve itself of having to make the city school district whole for school taxes, but that change does require approval by the state Legislature. This obligation totals approximately $3.5 million annually.
The council held a public hearing on the county transfer amendment Monday night. No one from the public spoke.
Corporation Counsel L. John Van Norden said the council could adopt the amendment at its July 11 meeting.
Acting Mayor Gary McCarthy said the amendment has support on the council. “The council will adopt it while we continue to negotiate with the county and school district,” he said. “The county would be responsible for collecting its own taxes. We would work out an arrangement where instead of holding them harmless, we would pay them as we collect it.”
McCarthy said the county would have to budget for the uncollected taxes. County officials were not available for comment.
If the charter change is approved, city residents could see a decrease in their tax bills, provided all things remain the same.
At the same time, residents of Schenectady County as a whole would become responsible for paying the city’s delinquent taxes, although this liability would be spread over a broader base, according to Blanchard.
McCarthy said the city needs to take action because it has a cash flow problem that makes it difficult to pay both the county and the school district the uncollected taxes owed to them.
The problem became acute when American Tax Funding decided in 2009 it would no longer pay dollar-for-dollar on liens it purchased from the city, McCarthy said. The ATF deal generated millions for the city.