taxes

Without mandate relief, local officials say, a proposed property tax cap will strangle county government.

The cap proposal is moving through Albany and today the Genesee County Legislature sent a strongly worded letter to Gov. Andrew Cuomo and local representatives.

Without addressing the root cause of the problem -- unfunded mandates -- counties will have to begin eliminating all non-mandated, community-based programs and services to stay under the cap. These programs include veterans services and aging programs, local road and bridge maintenance and repair, road patrol, long-term care and substance abuse services, to name a few.

Legislative Chairwoman Mary Pat Hancock told WBTA today that rising pension costs and Medicaid expenses that are "forced" on the county are eating up too much local revenue.

"Pension costs have gone up 31 percent," she said. "And in the past several years, Medicaid has continued to escalate in cost."

WBTA also spoke with  Batavia City Schools' Business Manager Scott Rozanski, who predicted dark days ahead under the cap.

"In essence, it means we could only increase our expenditures by about $350,000," he said. "Cutting more is doable, but it would probably create a lot more uproar." 

Superintendent Margaret Puzio blamed the current proposed increase in the tax levy on Albany.

"The only reason we're looking at an increase in the tax levy is because our state aid was cut," she said.

While in Batavia today, Sen. Mike Ranzenhofer addressed the issue. Ranzenhofer expressed support for Hancock's call to have the state assume the costs of Medicaid.

"I was a county legislator for 20 years -- I understand that issue," he said. "I'm also very concerned about overuse of the Medicaid system by some, to the detriment of others. I'm talking about not having every possible optional service that you can have.

If the state took over funding Medicaid, Razenhofer, it might take more seriously such as issues of fraud and waste and find ways to improve efficiency and reduce costs.

Press Release:

Assemblyman Steve Hawley (R,I,C – Batavia) submitted a motion for an open, transparent vote to ease the overwhelming tax burden on New York’s small business owners, but was denied by the downstate driven Assembly Majority. The bill, of which Hawley is the sponsor, seeks to eliminate the vendor re-registration fee to collect sales tax while providing a refund to those who have paid the fee. The legislation is stuck in the Ways & Means Committee, denying New Yorkers the opportunity to see which legislators truly support our state’s small business owners.

“Business owners should not have to pay for the privilege of collecting sales tax on behalf of the state,” said Hawley. “The vendor re-registration fee is yet another disincentive to own and operate a business in New York. We had the opportunity today to show this state’s job creators that we are ready to re-open New York for business, and by denying a vote on this measure, we have failed to do so.”

The Tax Foundation’s “2011 State Business Tax Climate Index” ranked New York the worst in the nation. The 2008-09 Enacted Budget authorized the New York State Department of Taxation and Finance to require all 585,000 vendors that collect state sales tax to re-register and pay a $50 registration fee. While it is set to expire next year, many business owners fear that it will be extended and permanently added to New York’s revenue stream.

Here's a news release from State Sen. Michael H. Ranzenhofer.

The New York State Senate has passed legislation (S.2682), introduced by Senator Ranzenhofer, that repeals the “cost recovery” tax imposed on local economic development agencies in 2009 and also requires the state to reimburse agencies for any monies previously paid.

After being passed in the 2009-10 state budget, the cost-recovery tax hurt the efforts of local industrial development agencies to get New Yorkers back to work by taking away economic development money from local communities and sending more revenue to Albany.

"During a time of high unemployment and an economy struggling from a national recession, the IDA cost-recovery tax made a bad situation even worse,” Ranzenhofer said. “Repealing this unfair tax puts funds back in the right place, in the hands of local community business leaders to entice businesses to locate in the state and create jobs, not in state coffers."

The 2009-10 state budget contained a maximum $5 million statewide cost-recovery tax on local economic development agencies. The tax does not reflect a rational basis for actual costs incurred by the state for providing services to local economic development agencies. Local economic development agencies already pay a Bond Insurance Charge to recover costs.

Members of local economic development agencies expressed their support for the legislation. This tax, based on operating revenue, is a disincentive for IDAs to expand programming or reinvest back into the community.

"Senator Ranzenhofer should be applauded for introducing the legislation to repeal this unfair tax," said Genesee County Economic Development Center President and CEO Steve Hyde. "His fellow Senators who joined him to pass S.2682 also deserve congratulations for standing up against this unfair assessment.”

Governor Cuomo has also included an identical provision in his 2010-11 executive budget proposal.

As most of us have read, the GCEDC recently announced that it is responsible for retaining 21 jobs in the Batavia area. According to the GCEDC, this was achieved by providing two existing hotels with sales tax breaks on their project to replace windows in their buildings.

I wrote to GCEDC inquiring how we can save jobs at $429/job, and specifically, what jobs are being retained. In the email I also questioned the wisdom of granting these tax breaks for a project that will, most likely, pay for itself over time though reduced energy costs.

The following are my original e-mail, and Steve Hyde's response. I call it a response, because I certainly cannot find any answers in the verbiage.

My e-mail:

Many taxpayers would like to know exactly how $429 saves a job.

That figure is derived from your own statement that a $9,000 sales-tax break for two hotels will retain 21 jobs. I cannot, for the life of me figure how that works. Are you asserting that the two firms would not go forward with this project without this tax incentive that constitutes 4 percent of the total cost? I find that doubtful. Even if so, specifically, what jobs will be “retained”?

Please also clarify how GCEDC justifies this tax break for two existing private businesses, when they are replacing older windows with new ones that will obviously pay for themselves over time through reduced energy costs. Your prompt reply is anticipated and appreciated.

Thank you.

Bob Harker

His response:

Feb. 7, 2011

E-mail Correspondence

[ e-mail address deleted ]

Dear Mr. Harker:

Thank you for taking the time to write us with regard to the Days Inn and the Super 8 project in which the GCEDC board approved a sales-tax exemption on Feb. 3, 2011.

The GCEDC Board of Directors, by way of this project and others, is focusing on and taking action in accordance with key elements of our legal authority and with regard to our organization’s mission, which includes catalyzing community economic development success by supporting the growth, expansion and retention of Genesee County’s existing base of businesses.

The GCEDC board’s philosophy is to assist area businesses by helping to ensure that companies across Genesee County remain successful, viable, employ residents and contribute to the overall tax base of the county.

The sales-tax exemption on the renovation project at the Days Inn and Super 8 hotel is an example of a retention project by GCEDC. And through our participation, albeit in a small way (a $9,000 sales-tax exemption), we are supporting and helping retain the ongoing viability of one of our area businesses which is actively investing in our community and contributes a considerable amount to the tax base of our community by way of sales-tax generation and property-tax payments.

Given New York recently ranked number 50 in state business-tax climate as measured in October 2010 by the Tax Foundation – it is pretty clear of the importance to provide tax assistance to new and existing businesses in order to level the cost playing field and to reduce some of the tax burdens on area businesses -- especially in order to ensure their long-term viability and contributions to the community’s tax base and employment base.

Given the Tax Foundation rankings, we must continue to do what we can at the local level to ensure Genesee County is known as a “business-friendly community,” despite the high-cost structures so well known by many at the state level.

It is imperative for our long-term economic success that we continue these practices of providing tax assistance to new and existing businesses, because without viable businesses in our community – we have no economic certainty -- our employment climate would be perilous and the tax burden placed on area residents -- because of a declining business tax base -- would be far worse than it is today.

Thank you again for your correspondence and please do not hesitate to contact me if I can ever be of further assistance.

Sincerely,

Steven G. Hyde

President, GCEDC

Can anyone help me find the answers to my questions?

The proposed City of Batavia budget for 2011/12 includes an increase in the property tax levy, taking it up to $10.51 per thousand dollars of assessed value, an increase of 1.59 percent.

The owner of a $80,000 home would pay $13 more per year.

It's a 16-cent increase over the previous year.

Total anticipated revenue for the budget year is projected at $14,800,662.

In connection with release of the budget, the city is releasing a strategic plan. Part of the plan funded in the proposed budget is the creation of an economic development director with a salary of $55,000 to $70,000.

In the proposed budget, the water rate is scheduled to go up 23 13 cents to $4.31 per 1,000 gallons. (strke-thru is correcting a typo in original city press release)

City Council President Marianne Clattenberg got a little worked up at Monday night's council meeting during a discussion of a proposed local property-tax cap that some Albany politicians are pushing.

“Why do they need us?" Clattenberg said. "They’re going to tell us what we can charge for property tax and then they’re going to tell us what we have to pay. They don’t even need local governments. They want control of everything. Albany is crazy right now.

"This whole sham of a property-tax cap is just a political ploy by the governor’s office to act like they're for the people," Clattenberg added. "So they say one thing to the people and then go the other way to stab them in the back."

At issue was a proposed resolution to send a message to Albany politicians, "no tax cap without mandate relief." The resolution will state that the legislature shouldn't approve a property-tax cap without eliminating mandated expenses.

A vote to place the resolution on the next council business agenda passed 6-3, with Rosemary Christian, Bob Bialkowski and Bill Cox voting no.

Cox argued that the city should be ready to make any spending cuts necessary without tax increases.

"We have other things we can cut," Cox said. "We need to give our property owners and our citizens tax relief. We can’t do it to them unless we take a stand, draw a line in the sand say, 'no more taxes.'"

Councilman Frank Ferrando said he was concerned that if a tax cap is enacted without mandate relief, the city will be forced to cut vital city services and eliminate key city jobs.

Albany, Ferrando said, shouldn't be dictating to local governments how to raise and spend money.

"If we're forced into that situation that could create real problems for our community," Ferrando said. "If we're in a situation where we need to make those decisions, that’s different. We will be making those decisions. We will make those hard decisions, but they shouldn’t be making them for us."

City Manager Jason Molino said mandated expenses on employee pensions, health insurance and health costs continue to escalate. Next year, for example, the city is looking at a $361,000 increase in mandated retirement benefit costs, and under the property-tax cap proposal, taxes could only go up by $72,000, leaving a $289,000 shortfall.

Foreclosure proceedings have begun against 68 county properties because of unpaid taxes, including the Le Roy Pontillo's location, according to County Treasurer Scott German.

Pontillo's owes for three years of back taxes, including school, town, village and county, totaling $24,261.

The delinquent property owners have until Jan. 14 to make final payment on their back taxes to avoid having the property sold at auction.

The auction will be scheduled for some time in March or April.

German said typically, 50 to 55 of the property owners will settle their tax issues prior to foreclosure.

All of the property owners have been sent letters, and notices have been published in two daily newspapers, with additional notifications pending.

With unanimous conscent Monday night, the Batavia City Council agreed to move forward with a plan to provide some tax relief to homeowners who undertake renovations.

In September there will likely be a public hearing on the plan, which will provide a tax credit over an eight-year period on the increased assessed value caused by improvements.

"This is important because, even if you do improvements, the value doesn’t necessarily change, but if the value does change because of that improvement, you can get an exemption on the increase of the assessment," City Manager Jason Molino said.

The exemption is possible by state law, which allows for a municipal government to institute the tax credit. The credit can be spread over eight years, with no tax on the increased assessed value, and 12.5 percent of tax on the increase being added each year.

The homeowner must make at least a $3,000 improvement, and the assessor must find that the improvement, not some other factor, caused the increased assessment. 

"I think this is long over due," Councilman Bill Cox said. "I think it will encourage people to improve their homes and it’s a sign that the City Council wants to encourage people to improve their neighborhoods."

Councilman Frank Ferrando also spoke in favor of the tax exemption.

"I like the idea that it’s the community investing in itself," Ferrando said.

It's called a "sweep." Imagine if all the money for the state's various special funds were on a big table, and Gov. David Paterson reached out his arm and dragged it across the top of those stack of bills and pushed the greenbacks into a giant gunny sack labeled, "General Fund."

New York has been doing it for years -- taking money earmarked for dozens of special programs, collected from dedicated fees, and using the funds to make up budget imbalances.

"Much of it is money that would be expended but the time has not come up yet for it to be spent," said County Clerk Don Read. "In (sweeping), they tend to make liars out of us who have to collect that money and tell people (what it’s used for)."

Two examples out of the County Clerk's Office: document fees and snowmobile license fees. The state has taken more than $500,000 from that fund over the past three years, Read said.

The first fee is used to fund grants for cities, schools, libraries and other smaller agencies to store, maintain and retain important records, and to modernize old systems.The snowmobile fee -- $90 for a non-snowmobile club member, $45 for members -- is used to maintain trails and facilities for snowmobilers.

Paterson's office is planning a $1 million sweep from the snowmobile fund this year.

"By sweeping out that money, there’s less to distribute to the grants, so a number of grants just don’t get funded," Read said. "Yet, we still have to tell the people that’s what we collect the money for."

The New York Post recently ran a story about Albany sweeping $8.5 million from a fund dedicated to building a veteran's retirement home.

Photo: Don Read from a previous story about license plates.

Some members of public employees unions in New York are bucking their union bosses and saying they should give back their 4-percent raises, according to Associated Press.

"I talked to my friends and neighbors who are losing their jobs and taking pay cuts and for me to get a raise, I functionally have to ask them to pay for it," Regan said in an interview with The Associated Press. He said he hasn't heard from anyone who opposes his view.

In other budget news, a group calling itself Better Choice for Budgeting Campaign, is calling on higher taxes and closing tax loopholes for Wall Street financiers and hedge fund managers.

“When you look at hedge fund managers making millions and millions of dollars and Wall Street having caused a great deal of the economic turmoil we find ourselves in, they should really help pay for it,” said Sen. Neil Breslin.

And while New York's budget is a week late today, Albany's Democrats and Republics are squabbling over procedure, according to the Times-Union.

Senate Democrats gathered on Wednesday to roll out an ambitious set of reforms to New York's budget process. Republicans shot back that the majority would do better to devote their time to the work at hand, and lambasted Democrats for failing to follow budget reforms that are already on the books.

Dr. Richard F. Daines is on a crusade. The one-time Morman missionary thinks people should not consume sugary drinks.

He wants the state to impose a one-cent-per-ounce tax on these beverages. He figures the tax would reduce consumption by 15 percent. He also estimates the tax will help raise $1 billion for the state.

And if you happen to believe this is just one more government intrusion on personal choice, then he thinks you're a dupe of the soft-drink lobby.

He ridiculed what he called the “personal choice” argument that government should stay out of people’s kitchens, saying it was being promulgated by “AstroTurf false-flag operations” that are really supported by the soda pop industry.

Read the story in the New York Times.

At a time when New York is struggling to close a $9.2 billion budget deficit, the state's workers represented by labor unions received a 4-percent pay increase April 1.

The wage hike will saddle taxpayers with another $400 million in annual expenses to cover.

The contracts with the Civil Service Employees Association and the Public Employee Federation were negotiated by former Gov. Eliot Spitzer in 2007.

Gov. David Paterson thinks the unions should turn down the raises, according to Business First.

"All public employees are a critical part of our state government. They deliver essential public services and, for that, they deserve our respect," he said Thursday. "But New York remains mired in a fiscal crisis of nearly unprecedented magnitude that will require real sacrifices. In agreeing to forego these scheduled 4-percent salary increases, the leaders of New York’s public employee unions have a real and concrete opportunity to demonstrate they understand the dire nature of this fiscal and economic crisis, and that they are willing to become a serious partner in addressing it.”

Unions flatly stated they will not budge. They say their contracts were fairly negotiated and must be honored.

“PEF will not reopen its contract with the state of New York,” said Kenneth Brynien, president of the Latham-based union that represents 58,000 white-collar state workers.

“What people don’t seem to grasp is, if you break a contract, you’re setting a terrible precedent. It ignores that you have legally binding documents,” said Stephen Madarasz, spokesman for CSEA.

There are 196,375 workers on the state payroll, and 94 percent of them are represented by a union.

At one time, Batavia School District officials spoke of a possible 10-percent tax increase on local property owners, but the final approved budget includes only a 1.23 percent increase.

District Business Manager Scott Rozanski told The Batavian's news partner WBTA, that past years' conservative budgeting -- underestimating revenue and holding a line on expenses -- has made it easier for the district to weather big cuts in state aid.

"There may be a greater impact next year and in future years if the trend continues," Rozanski said.

The 1.23-percent increase works out to 27 cents per $1,000 of assessed value, so on a home assessed at $80,000, the taxpayer will pay the school district an additional $21.60.

Rozanski said that over the past few months, the district has been able to cut expenses, which contributed to the district's ability to hold down the tax increase.

WBTA has posted a historical chart of tax increases (and decreases) from the district as well as an MP3 of its interview with Rozanski (click here).

Voters will be asked to approve the budget May 18.

County taxpayers will save more than $1 million in interest payments, thanks to an effort by County Treasurer Scott D. German to refinance four old bond issues.

German got permission from the County Legislature in January to try to refinance the bonds, and closed on all four issues -- from 1996, 1998, 1999 and 2001 -- on March 16.

The total savings turned out to be $1,113,632.50 over the next six years.

"We did better in the market place than we anticipated, we did about 10% better than expected,” German said in a press release today. "I couldn’t be happier to help provide these savings to the taxpayers.

The $10.7 million in bonds helped build the court facility, make improvements to the county building and old courthouse, build the GCC technology center and renovate the county nursing home.

From the press release:

Since we are experiencing low rates of interest in the bond market, German asked Fiscal Advisors, the county’s financial advisor, to take a look at refinancing  to see if it was worth while, “as it turned out it was a gigantic savings to the taxpayers,” German said.  “It is not often that I can save taxpayers over a million dollars, I am so glad I asked the question,” German said. “Bottom line, this is a great savings to Genesee County taxpayers."

Notice of foreclosure for unpaid taxes have been filed against more than a dozen property owners in the city.

Property owners have until May 14 to pay the back taxes or face foreclosure and have their properties put up for auction.

The properties listed by the city, with amounts owed, are:

606-622 E. Main St., Andrew Mistler, $23,375
643 Ellicott St., Rear, Chess, LLC, $306
13-15 Jackson St., Rear, C.L. Carr Properties, LLC, $2,939
4 Cherry St., Barbara A. Suozzi, $15,876
507 Ellicott St., Margaret J. Colantonio, $15,389
20 Franklin St., Maxin P. Johnson, $14,527
151 Harvester Ave., Jeffrey C. & Diane M. Shultz, $12,191
3 Manhattan Ave., David R. Foley, $21,190
16 Oak St., Mary M. Sorce, $10,707
11-13 Raymond Ave, Philip R. Zickl, Jr., $17,298
48 Riverview Parkway, DVM Corp., $649
21 South Lyon St., Richard S. and Tamara E. Ishmael, $21,544
132 Summit St., Thomas and Mary L. Geary, $4,705
1 Union St., Douglas C. and Lori A. Veltz, $21,027
308 Washington Ave., Rose L. Nigro, $3,585

One name that may jump out at readers is Mistler. I spoke briefly with Ken Mislter about his properties and he said there was a misunderstanding with the city. He said he's been working with the city to resolve the issue and the matter will be settled shortly.

This list originally appeared in the PennySaver. Part of the original list was 643 Ellicott St., Rear, owned by Hanson Aggregates. Those taxes have been paid, according to City Clerk Heidi Parker.

The properties listed below were reportedly foreclosed on by Genesee County for non-payment of taxes.  They will be auctioned off March 27 at Bontrager's.

The properties listed as owned by Genesee County are properties that were not sold at the last auction.

TOWN OF ALABAMA 15.-1-42 SHAMROCK FRANK C KENYON AVE. TOWN OF ALABAMA 6.-1-79 COUNTY OF GENESEE 789 LEWISTON ROAD TOWN OF ALEXANDER 11.-1-40.12 UNKNOWN GENESEE STREET TOWN OF ALEXANDER 15.-1-29 CAPWELL THOMAS 4011 COOKSON ROAD TOWN OF BATAVIA 13.-1-107.1 COUNTY OF GENESEE EAST MAIN STREET ROAD TOWN OF BATAVIA 3.-1-114 MOONEY JUDY L 7881 LEWISTON ROAD TOWN OF BERGEN 6.-1-19.1 CONTE RICHARD E 6567 NORTH LAKE ROAD TOWN OF BERGEN 11.-1-26 DURRANT SHARON & DAVID J 6422 WEST SWEDEN ROAD TOWN OF BYRON 5.-2-44 TEAMCO CORPORATION 6657 COLE ROAD TOWN OF BYRON 7.-1-13.12 STANTON BONNIE 6902 ROUTE 237 TOWN OF LEROY 30.-1-94 FIX JOHN AND LORIE WARSAW ROAD TOWN OF PAVILION 15.-1-9.21 THE ESTATE OF GERALICE RAE BURGH STARR ROAD TOWN OF PEMBROKE 18.-1-52 CAPWELL THOMAS J SCRIBNER ROAD VILLAGE OF ALEXANDER 2.-3-20.1 FULLER JEREMY J 3438 TELEPHONE ROAD VILLAGE OF LEROY 7.-1-65 NORSTRAND DANIEL 1 PLEASANT STREET VILLAGE OF LEROY 7.-2-11 NORSTRAND DANIEL 8 PLEASANT STREET

The State Department of Taxation and Finance notified Industrial Development Agencies (IDAs) earlier this month of a “cost-recovery tax" on revenues, included in the 2009-10 budget, to cover costs of state government services; even though the state statute required the notification by Nov. 1, 2009.

In regard to this, Sen. Michael Ranzenhofer has issued the following statement:

“The most recent development in New York’s tax epic is to punish development agencies for helping businesses locate in our community and create jobs. The 'cost-recovery tax' is nothing but a tax on job creation, effectively hurting efforts of community business leaders to bring jobs to Western New York.

Revenues generated by IDAs are reinvested. The 'cost-recovery tax' steals economic development dollars from our community. Even worse, the tax is based on revenues for 2008, most of which have already been reinvested.

Local industrial development agencies already pay a Bond Issuance Charge to the state for government services. The 'cost-recovery tax' forces local agencies to pay double and this is excessive. After the Authority Budget Office collects the job-creation tax, its budget will increase by 300 percent.

Over the next few days and weeks, I plan to work with my colleagues in state government to defeat yet another job-killing tax.”