Amsterdam Common Council agrees to repay Montgomery County $1.2M

File photo
File photo

Categories: -The Daily Gazette, Fulton Montgomery Schoharie, News

The city Common Council on Tuesday agreed to repay Montgomery County for the $1.2 million in county taxes the city collected but failed to turn over to the county over an eight-year period.

Deputy Mayor James Martuscello, who represents the 5th Ward, said the city owes the money to Montgomery County.

“We collected this $1.2 million,” Martuscello said. “So, we’re going to pay them, as part of this agreement, over a period of 20 years, with 1 percent interest. You’re going to say, how are we going to pay that? I believe it’s coming out of our sales tax. [The county] is going to deduct it.”

The Montgomery County Legislature in June voted 6-3 to approve the 20-year 1 percent interest plan for $1.2 million owed by the city. Nearly half of the money owed came in 2013 when Amsterdam collected $725,037 in county taxes, but only turned over $32,401.

The tax repayment plan was spearheaded by District 9 Legislator Robert Purtell, and is aimed at allowing the city to make annual payments of approximately $74,000.

The repayment plan was fiercely debated among the county legislators, with Legislature Chairman Joe Isabel, District 8, Finance Committee Chairman Michael Pepe, District 7, and District 4 Legislator Robert Headwell voting against the plan.

Third Ward Alderwoman Irene Collins Tuesday night voiced objections to the county subtracting the city’s annual payments from the city’s share of the sales tax, which is collected by New York state, and then dispersed by Montgomery County according to the sales tax sharing formula between the city, the county and its towns and villages.

“I don’t like that idea, because the paper trail, you’re playing with the paper trail now,” she said. “If we collect $1 million in sales tax, that’s what our books should reflect, and then we should be the ones issuing a check to the county for their payment, so we both have an accounting.”

Martuscello said he believes the county will provide the city with a receipt.

“It doesn’t matter, if we’re showing a check, and we wrote a check, and then we can show a bank statement that that check cleared — that’s our tracking,” Collins said. “That’s why I don’t like this.”

Second Ward Alderman David Gomula said the common council should remember the county has forgiven a portion of the money owed by the city.

In June, County Treasurer Shawn Bowerman estimated the city owes another $514,254 in county taxes that was never turned over, but the city has lost all of the parcel-data records pertaining to it, making it impossible to collect. Bowerman has said he’ll likely introduce a resolution later this year for the Legislature to write off that debt as uncollectible.

Martuscello said the county legislature agreed to the tax repayment plan contingent on the county being able to deduct the annual payments from the city’s share of the sales tax disbursement.

“This way, they are guaranteed the money, and they don’t have to wait,” Martuscello said.

“Well, they didn’t talk to us about that,” Collins said.

 Collins said for accounting and auditing purposes the city should show that it is making the annual payments.

Tony Casale, the council’s legal counsel, said the issue of how the repayments would be made by the city was “gone over at length” during the negotiations between Mayor Michael Cinquanti’s administration and the members of the legislature.

“The collection from sales tax was at the insistence of the county,” he said.

Martuscello said the only reason the legislature passed the 20-year repayment plan was because the county knew it would be able to deduct the annual payments from the city’s share of the sales tax.

“They were not going to agree on this,” Martuscello said. “The only reason this swung the way that it did, this $1.2 million, some of them thought we owed a lot more than this, so they came to this number, which is fair, but that’s contingent upon them being able to draw this money from the sales tax. And that’s what they agreed upon, and that’s how they got the majority for this.”

Martuscello said the city has no choice but to accept the county’s terms.

“We’re in no condition right now [to haggle],” he said. “[The amount the city owes to the county in taxes] is one of the sticking points in our audit, that we need to clarify, because every year when the audit comes out [our auditors] say it’s a blind eye for the city because we hadn’t come to an agreement on this.”

Bowerman and Pepe argued the county should require the city to borrow the $1.2 million as part of its recent $7.7 million deficit finance municipal bond. New York state in 2019 passed special legislation enabling the city to borrow up to $8.3 million, but the city in June borrowed $7.7 million with an unexpectedly low interest rate of 1.89 percent.

Pepe in June argued the city had the ability to borrow the money owed to Montgomery County and pay it back all at once, and should have been required to do so.

“Look, if you’re sitting there telling me that if we had a chance to take the $1.2 million, from a state loan, and you’d prefer to restructure it over a longer period of time, I am in total disagreement with that,” Pepe told the rest of the legislature. “But if there’s no other means to collect it then we should move forward.”

Collins on Tuesday agreed if there is no other means to repay the money the council should move forward, although she still doesn’t like the repayment method.

“So, I would recommend we pass it, Irene, I’m not saying you’re wrong,” Martuscello said.

“I’m just … I don’t like it, but if the state agrees with it, and you all agree with it then fine,” she said.

Fourth Ward Alderman Stephen Gomula said he doesn’t think the city has a choice. First Ward Alderman Patrick Russo agreed with him.

“We need to get this over with,” Russo said. “[If we said no] then we’re back to square one. They wanted this whole payment right away.”

“You know what, that’s why — in all honesty — we should be thanking the county for coming to this agreement, and Shawn Bowerman, and Matt Ossenfort and the legislators that voted for us,” Martuscello said. “We’re not going to miss the money, because it’s going to be withdrawn right from the sales tax, but Irene, I think you’re right we should have a receipt, and then when he’ll have a paper trail.”

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