New sales tax plan a relief to some, unacceptable to others

Assemblyman Kevin Cahill. (Photo: Phyllis McCabe)

An example of the language in the document made public on Tuesday reads thus:

“For the sales tax period March 1, 2016 through Feb. 28, 2017, the city shall receive 11.5 percent of the total net collections and the towns three percent of total net collection. Of these total net collections, 40 percent of the total net collections will be allocated and disbursed to the city and the towns from the additional one percent of total net collections and the remaining 60 percent shall be allocated from the three percent total net collections with the county retaining the balance for county purposes.”

The agreement lists Mayor Noble and legislature Chairman Ken Ronk as the contract signers, though Ronk said the final word on the county side will rest with Hein. “The executive negotiates contracts, which we adopt as resolutions,” Ronk explained. “The executive signs or vetoes all resolutions.”

Though Ronk didn’t have a timeline for legislative approval, he expects passage next month. “This thing has festered long enough, and I really want to get it done before somebody changes their mind,” he said. Ronk said a May 17 vote by the legislature was likely unless a special session is required. Ronk said he believes a majority of the 23-member legislature will approve the contract as submitted by the executive. The state requires a final document by June 1.

One percent extension liability

The contract projects a growth rate of $750,000 a year on the $16 million the county currently distributes to the city and towns. The 2.1 percent projected growth compares to the slightly less than 2 percent overall sales-tax growth detailed in a state comptroller’s report over the 2010-16 period (projected).

The press release issued by Noble and Hein gives considerable attention to the renewable 1 percent surtax and the consequences should it be delayed, as it was during the so-called “Cahill sales tax crisis.” At 2016 projections, the 1 percent surtax would be worth $27.5 million or about $2.3 million a month.

The statement reads: “Following 2017, the county will begin receiving sales tax growth from the City of Kingston’s portion of sales tax receipts to help offset critical county expenses. This will be accomplished through a city sales tax ‘growth freeze.’ The total value for the growth section is estimated at $750,000 over the term of the agreement. In addition, in the event that the county’s authority to levy the existing 1 percent sales-tax [surtax] is not renewed by the state, the city and towns will share that impact with the county in a 40/60 split. This creative agreement provides for the city’s sales tax distribution to remain at 11.5 percent and the towns at 3 percent.”

A battle over the 1 percent surtax was waged between Cahill and Hein in 2013, with Cahill insisting that as a condition of his support for state passage, the county assume the cost of Safety Net welfare expenses and elections over a three-year phase-in. Hein said his administration had already been committed to that goal. The two-month delay in Albany’s approving the surtax cost the county some $5 million in revenue according to Hein, and about $3 million in revenue according to the county comptroller.

Cahill said that regardless of the contract, the state by law will retain jurisdiction over the 1 percent surtax. Said Quigley, “It means our liability [the city and towns] will be a lot greater if somehow there’s a problem between Mr. Hein and Mr. Cahill.”