Schenectady County

Schenectady city-county sales tax deal clears first hurdle

Schenectady Mayor Gary McCarthy is pictured in a file photo.

Schenectady Mayor Gary McCarthy is pictured in a file photo.

Categories: -The Daily Gazette, News, Schenectady County

 City lawmakers tentatively approved a new eight-year deal on the distribution of county sales tax revenue on Monday.

The deal struck with the county contains a new base amount of $1 million in revenue.

Under the existing agreement, the city receives 17.195 percent of the 3 percent sales tax revenue collected within its limits.

That percentage will remain for the first year only, city Corporation Counsel Andrew Koldin told the City Council’s Finance Committee on Monday.

After that, a new percentage will be determined for the remaining years on top of the $1 million.

“At the very least, it will be the same percentage,” Koldin said.

New York state has an eight percent sales tax, 4.05 percent of which is imposed by the state.

The local share is 3.95 percent.

The city has a legal right to receive close to half of the sales tax generated within its limits because it already had the three percent sales tax in place before the county established its countywide sales tax in 1988, according to a county memo outlining the agreement.

Of the 3.95 percent, one-half percent is further divided: 70 percent goes to the Schenectady County Metroplex Development Authority, and the other 30 percent to the county’s towns and villages.

Under the first year of the deal, the city was guaranteed at least $11.7 million in revenue.

In recent years, sales tax has been worth around $13 million annually to the city.

Future numbers are unpredictable given the ongoing pandemic.

“Unfortunately, we’re in a downturn now so we’re bearing some of the risk in the reduced revenue,” McCarthy said.

The additional $1 million is in exchange for the services provided by the city that benefit the county, including Hazmat, police, community redevelopment and demolition agreements for blighted structures, up from $630,000 paid out annually by the county.

Schenectady County first announced the deal last Friday, which is one that pleases some long-time critics of the amount of sales tax the county shares with its towns and villages.

For the first time, the agreement includes a guaranteed annual increase for local municipalities — though not until the fourth year.

The deal also guarantees the 2019 level of payments to the towns and villages in the first three years, despite the nosedive in sales tax revenue, one of the largest sources of revenue for local governments.

More than $105 million in sales tax revenue was collected in Schenectady County in 2019, according to the state comptroller’s office — but that is expected to be off by 10 percent or more this year.

The county agreed to share nearly $7.8 million a year with localities, including Glenville, Niskayuna, Rotterdam, Princetown, Duanesburg, Scotia and Delanson.

With the approval of the deal clearing the city’s Finance Committee, the full City Council will vote next Monday, and the county Legislature, Oct. 5.

Localities are in the process of preparing their 2021 municipal budgets, all of which are expected to be lean amid the ongoing economic woes, including the closing of Rivers Casino & Resort, which reopened earlier this month after being closed for nearly six months.

Last year, the facility generated $3 million in sales tax revenue for the city.

The city faces at least a $12 million shortfall, which includes aid withheld by the state, and officials are fine-tuning the preliminary budget proposal before its release next month.

Absent a federal aid package for local governments, McCarthy floated the idea of cutting dozens of fire and police personnel earlier this spring.

Layoffs, however, were averted after City Council authorized City Hall to borrow as much as $7 million earlier this summer.

McCarthy declined to discuss possible cuts on Monday.

“We’ll be doing an announcement on Oct. 1,” McCarthy said, referring to the unveiling of his annual budget proposal.

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