If the deal is so good, why isn’t the state taking the money for itself?
That’s the question that officials in every small town and village in New York should be asking themselves when they evaluate a new plan by Gov. Andrew Cuomo to replace money from a popular local state aid program with revenue generated by a future new internet sales tax.
Last month as part of his annual budget message, Gov. Andrew Cuomo proposed cutting $59.2 million from the Aid and Incentives for Municipalities (AIM) program.
The program helps towns, cities and villages offset some of their expenses.
(Cities would not see their aid cut.)
Not surprisingly, when word got out about the proposed cut to those towns and villages, they were more than a little upset, particularly since many had already planned for the money in their current budgets.
For many towns and villages, AIM is their largest single source of state revenue sharing. With the cuts, some communities said they would have to lay off employees and/or cut back on some essential services to make up for the loss.
The governor deservedly got an earful from the local officials, who have struggled with their budgets due to the mandatory state cap on property tax levies and from the continued imposition of unfunded state mandates on municipalities.
So rather than just admitting his mistake and restoring the aid, the governor has come up with a new plan to replace the money through a new tax on internet sales that would be redistributed through the counties.
There are a few problems with this.
First, it’s dishonest.
The additional sales tax was supposed to be used to help offset county taxes.
Instead, the governor is proposing to use it as a substitute for aid the state is taking away from towns and villages.
Another problem is that sales tax is distributed to municipalities through the counties.
Many towns in the state, including Glenville and others, have long complained that they don’t get their fair share of county sales tax revenue.
By replacing a reliable form of state aid with a less-reliable form of sales tax aid redistributed by the counties, some municipalities are likely to lose out.
Finally, the new state internet tax doesn’t actually exist. There’s no telling when it will be collected, how much money it will actually generate or whether it will actually make up for the loss to towns and villages of their AIM money.
This is, as some municipal officials put it, a shell game to get the state out of supporting struggling municipalities.
To be fair to counties, towns and villages, and their taxpayers, the Legislature should restore AIM funding and make sure the counties eventually get their fair share of the new internet tax.