Evan Christou says increasing menu prices at his Tops American Grill wouldn’t guarantee him any additional revenue.
In truth, a sizable percentage of customers would see the new prices and likely decide to take their business elsewhere, he explained. And if enough customers stopped coming through the door, he’d eventually see his bottom line dip.
“You’re going to get pushback, you’re going to get stoppage and you’re going to get a slowdown of patronage,” he said. “Increasing taxes does the same thing.”
Christou, who employs 45 people at his Rotterdam restaurant, used the illustration to show why he believes the proposed 7.49 percent increase in the property tax levy included in the county Legislature’s 2013 budget will ultimately reduce county revenues. The additional taxes could have a cooling effect on the pace of business for both owners and customers.
Some businesses might close and others could have less capital to reinvest, Christou said. The increase could also prompt county residents to cut costs, meaning fewer dollars spent eating out or making casual purchases.
“That tax increase has such a snowball effect on the spending habits of the community at large,” he said. “In the end, it could actually decrease the amount of revenue.”
Christou is among businesses in the Chamber of Schenectady County urging legislators to reconsider such a tax load increase. On Thursday, the chamber called on its members to either voice opposition to the increase at the county’s budget hearing Monday evening or speak out to local legislators about their financial struggles.
Chamber President Charles Steiner said the call to action is aimed at getting the county Legislature to understand their plight, especially after they voted to override the state tax cap earlier this month. He said members of the chamber are committed to working with the county, but they simply can’t afford a tax levy increase that exceeds the 2.95 percent cap imposed by state guidelines.
“The whole point is that we have to jar ourselves to look at the total cost of government,” he said. “We’re passing these costs on to taxpayers and we need to get hold of them.”
Steiner said the proposed increase will discourage investment at a time when many businesses are struggling. Not to mention, he said, the increase proposed by the county also falls on top of other municipal tax hikes, meaning some members could face a double-digit jump in tax rates.
“The members have come to us and said this is a concern and we believe the business voice needs to be heard in this discussion,” he said.
The county’s proposed 2013 budget projects $296 million in spending, with about $69.24 million to be raised through property taxes — the total tax levy. County Manager Kathleen Rooney said she already cut $5.5 million from the budget, but the lion’s share of the increase was caused by mandated costs. These include the District Attorney’s Office, the Sheriff’s Department, Medicaid and child welfare programs. Discretionary items are a much smaller percentage of the budget and include services such as the library system.
County legislators have been working through the 271-page spending plan since it was proposed last week and could make changes. Philip Fields, chairman of the Legislature’s Ways and Means Committee, said the budget is a living document and no firm decisions have been made on what the final tax levy will be. The actual tax rates for each municipality in the county have not been set, as they vary depending on local assessment figures.
“We’re still reviewing and formulating decisions as to the direction of changes in the budget,” he said.
Fields acknowledged the Legislature has some tough decisions ahead. But he said cutting the budget beyond what was proposed may also mean sacrificing services. “Any cuts could only be taking place in the areas we’re not mandated to serve,” he said.
Business owners like Christou aren’t convinced. He said county needs to find areas to cut, or risk having businesses scale back or even close.
“This could be the straw that breaks the camel’s back,” he said.
One of those businesses could be the Katbird Shop in Schenectady. Owner Kathy Fitzmaurice said the property taxes on her Liberty Street building that were manageable when she bought the business seven years ago have since increased to a point where she’s having to make tough decisions.
Today, Fitzmaurice said she pays about $10,000 per year in taxes. She said an increase in that figure will only make it harder for her to run the small gift shop.
“It’s not going to help things,” she said. “It has me looking at other options.”