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Merchants balk at proposed city sales tax hike

Merchants balk at proposed city sales tax hike

Local consumers and shop owners would rather see the city manage spending than increase the sales ta

Local consumers and shop owners would rather see the city manage spending than increase the sales tax rate, a sampling of people said after city officials floated the idea of a bigger tax bite as a way to raise more revenue.

“You’re just getting more money to mismanage,” said Kathleen Quartararo, who co-owns Virgil’s House cafe on Henry Street. “If I just keep raising my prices and don’t pay attention to how I manage my money, I still don’t have any money.”

Saratoga County Chamber of Commerce President Joseph Dalton has been hearing the same sentiment from merchants he’s talked to around town.

“It’s a tax, just like fees are taxes,” Dalton said. “And government on a national, state and local level cannot just continue to increase taxes to solve problems.”

But the possible increase officials suggested at a public hearing last week — from 7 percent to 7.25 or 7.5 percent — wouldn’t change people’s spending habits, others said.

“I don’t think that small an increase would affect me too much,” said Kristin Overholt, 35, of Burnt Hills.

Her three daughters go to school at the YMCA of Saratoga, so she spends much of her time in the city and makes a point of shopping downtown.

“I would rather see things like sales tax increase rather than property taxes,” Overholt said. “Look at what you get for that small increase.”

Crafters Gallery owner Roger Goldsmith said most shoppers won’t even notice a sales tax increase that small, which would add an extra nickel to the cost of a $20 item.

But how the increase is portrayed in the media and by neighboring towns with only 7 percent tax could affect people’s spending habits, Goldsmith said.

“Perception’s a scary thing,” he said.

Saratoga County has the lowest sales tax around at 7 percent, and is one of only five counties in the state with a 7 percent tax.

The rate in other counties in the Capital Region is 8 percent. Schenectady raised its rate in 2003.

Of the total rate, 4 percent is the state’s take. The remainder is divided in various ways between the county and the municipality.

Increases above 7 percent require state Legislature approval.

The city would net half of any sales tax increase, with Saratoga County getting the other half.

Mayor Scott Johnson said if the rate were raised to 7.25 percent, the city would get another $730,000, and a hike to 7.5 percent would mean an extra $1.4 million a year for the city.

Accounts Commissioner John Franck questioned those numbers, saying they would be slightly lower, since Johnson based his figures on 2008’s $8.7 million in sales tax revenue instead of 2009’s $8 million.

Based on Franck’s calculation, the city would get about $500,000 or $600,000 extra from the hike, he said.

Including Johnson, three City Council members mentioned increasing sales tax last week at a public hearing on the $2.2 million budget deficit, although all were quick to say they weren’t pushing the idea.

“Certainly that would bring in revenue if we decided to do that,” said Anthony Scirocco, commissioner of public works. “I’m not advocating we do that.”

Public Safety Commissioner Richard Wirth said he wants public feedback on raising the sales tax.

“That might be a way to help close the gap.”

City officials believe Saratoga County will raise its sales tax rate in the next few years anyway, which would lessen the impact if the city has a higher percent tax than its neighbors for only a year or two.

County Administrator David Wickerham said the county has no plans to raise sales tax.

“The county’s not contemplating any increase in sales tax,” he said. “It’s just something that we’re reluctant to do.”

Franck, who said he won’t vote for a sales tax increase if it makes it to the table, said the city wouldn’t be able to bank on the funds until next year, because it would probably take until fall for the state Legislature to approve a change.

“You couldn’t really bank any of that money to really help us this year,” he said.

Any revenue projections ought to account for a temporary drop in purchases that could happen after the increase, Franck said.

“There’s been numerous studies done that people will go other places for a bit.”

Goldsmith, the Crafters Gallery owner, said raising the sales tax should be explored, but he’s not sure what he thinks about it yet.

“I think you’ve got to put it on the table and look at it,” he said. “I’m kind of on the fence either way.”

Johnny, a regular customer at Virgil’s House who asked that his last name not be used, opposes any sales tax hike, but thinks it’s inevitable.

“New York state’s already the epitome of tough living,” the city resident said. “They’ve got the highest prices basically on everything. I don’t think there’s anything that’s going to stop that.”

Quartararo points to overtime pay, retirement and health care benefits that government employees have enjoyed for decades while taxpayers foot the bill.

“It’s somehow this big white elephant that nobody wants to talk about,” she said.

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