Saratoga County sales tax increase before supervisors

PHOTOGRAPHER: Stephen Williams

The tentative 2012 county budget recommends increasing the county sales tax by 1 percentage point to cover rising costs and eroded revenues.

The sales tax would be hiked from 7 percent to 8 percent, but property taxes would not rise under the $320 million budget proposed Wednesday by County Administrator Spencer Hellwig III.

The sales tax increase, which would also require approval by the state Legislature, would be the first since the county sales tax was first imposed 30 years ago. It follows a year in which sales tax revenues fell millions of dollars short of what county officials had planned on, straining county finances. The county has already instituted a hiring freeze and other austerity measures.

Without action to raise the sales tax and cut spending, Hellwig said, the county could face a $32 million deficit next year.

The sales tax is the county’s largest single source of revenue, projected to bring in $111 million next year.

Board of Supervisors Chairman Thomas N. Wood, R-Saratoga, said he can support a sales tax increase, despite the traditional Republican reluctance to raise taxes.

“Really, our backs are to the wall. We don’t want to raise property taxes, and there are few other alternatives,” he said.

However, other supervisors are already coming out against the idea.

“I won’t vote to raise the sales tax. There’s still a lot of fat in the budget,” said Supervisor Frank Thompson, R-Milton, chairman of the Law and Finance Committee, which oversees budget deliberations. Thompson was defeated in a September primary, and leaves office at the end of the year.

But Charlton Supervisor Alan R. Grattidge, who will chair the committee in 2012, said a sales tax increase is preferable to a property tax increase. “A sales tax increase seems to be a more equitable way to go,” he said.

Supervisor Phil Barrett, R-Clifton Park, said he’s not convinced the county has looked hard enough at selling either the unused county landfill in Northumberland or the Maplewood Manor nursing home.

“I’d have a very, very hard time supporting a sales tax increase of any type,” Barrett said. “I’d like to see us do some things to reduce the cost of government before we move forward with a sales tax increase.”

budget rises

Next year’s proposed spending is up $26 million from this year, but Hellwig said many of those increases are for Medicaid, community college tuition reimbursements and other costs beyond the county’s control.

If supervisors approve the sales tax increase, Saratoga would join Albany, Schenectady, Rensselaer, Montgomery and Fulton counties in charging 8 percent.

“There are only five other counties that aren’t at 8 percent,” Hellwig said.

The increase would require approval from the state Legislature as well as the supervisors. Because the Legislature can’t act until next year, Hellwig isn’t anticipating starting to collect the additional money until next fall.

Wood said he didn’t think raising the sales tax would have much impact on where people shop. “I could be fooled, but I don’t think 1 percent will make much of a difference in people’s shopping patterns,” he said.

Half of the increased revenue would be shared with towns, villages and the city of Mechanicville under a standing sales tax distribution formula. The increase wouldn’t apply in the city of Saratoga Springs, which collects its sales tax separately, and is currently at 7 percent.

Hellwig said he is conservatively estimating the sales tax increase would bring in an additional $11 million next year.

He said the sales tax increase is a better way to raise extra revenue than increasing the county’s property tax, which varies by town but averages $2.15 per $1,000 assessed value. That is the lowest in the state, something county officials have bragged about for years.

“Recognizing that so much of our success has been tied to these priorities is why, despite facing unprecedented budget shortfalls, we are committed to not raising our property tax rate,” Hellwig said.

In addition, he is proposing drawing an additional $10.4 million from the county surplus — a move that could drop the rainy day fund to a dangerously low $2.1 million. But raising that $10.4 million by property taxes would result in a 22 percent tax increase, he said.

“This would impose an undue hardship on our residents and businesses,” Hellwig said.

Hellwig, who was appointed last December and is preparing his first county budget after a long apprenticeship under retired county administrator David Wickerham, acknowledged his proposal would push the fund balance too low for comfort.

“The challenge for next year and beyond will be to build this number back up to at least $12 million, which is the minimum threshold of 5 percent recommended by the state Comptroller’s Office,” he said.

The budget proposes no county employee layoffs, but does eliminate 41 positions that are currently vacant, at a savings of $1.2 million. There are no new positions proposed.

There are also no provisions for employee raises in 2012. The county’s contracts with its major labor unions expire at the end of this year.

Hellwig also said the anticipated losses next year at the county’s Maplewood Manor nursing home will hit $9.4 million — the highest loss yet in what’s been a series of money-losing years for the county infirmary.

Supervisors voted in 2006 to keep Maplewood Manor as a publicly run nursing home, but he said the issue needs to be re-examined.

“My advice to the board will be to identify all available options and quantify them before making a decision on how to proceed,” Hellwig said.

The budget also eliminates the $500,000 appropriation for the popular open space preservation program.

Barrett, chairman of the county’s Land Preservation Committee, said he wasn’t happy about that. “I think it’s definitely worth fighting for, but I understand the economic realities as well,” he said.

Outside-government organizations, including Cornell Cooperative Extension, are targeted for 10 percent cuts.

The public hearing on the proposed budget will be held at 5:30 p.m. Dec. 1, at the county meeting rooms in Ballston Spa. The county board is scheduled to vote on adoption Dec. 14.