At a special meeting of the Chemung County Legislature on Monday night, August 19th, County Executive Tom Santulli addressed the County Legislature presenting to them his County Financial Restructuring Plan that included a proposal to change the sales tax distribution formula.
In the plan, Chemung County would keep more of the sales tax generated in the county while municipalities would get less. As the plan stands currently, the county keeps 50% of sales tax dollars while the other 50% is divided among the City of Elmira, towns and villages, based on population. The sales tax rate is 8 percent with the county receiving 4% and the state taking the other 4%. The new sales tax formula will be phased in over a five year period starting in 2014. Under Santulli’s new formula plan, the county would be keeping 65.58% of the total sales tax taken in by the time the entire phase-in is completed in 2018. The municipalities would receive 34.42% which would be distributed by population.
Santulli proposed the change because of plummeting sales tax dollars, that if they stay on the current track, will cause a $6.5 million shortfall by years end. The county has announced that it will tighten its belt by eliminating 30 full-time jobs, re-organizing some current services and cutting $750,000 from programs and county spending along with other cost-saving measures. A hiring freeze is in effect for the remainder of this year.
Santulli believes that most towns can deal with less sales tax revenue because they have large fund balances. “They have these fund balances because we have given out too much sales tax. That’s where their fund balances came from. I think they have plenty of reserve to get through this,” Santulli said. Legislators were told that if sales tax were to grow three and one half percent each year for the next 5 years beginning in 2014, municipalities would continue to receive the same amount of sales tax dollars that they receive now (2013) based on that growth.
Legislator Rodney J. Strange who represents the Towns of Ashland, Southport, Elmira and the Village of Wellsburg says he wants to hear from those municipalities as the plan moves forward. “Now that we have definitive numbers and know what the plan is, I want to see where that puts the municipalities that make up the 15th district,” Strange said. “No one is happy with this plan. The question is ‘can we make it work?’ I will seek the input from the officials in my towns and village to see where they stand on this proposal and how it would be implemented in each municipality. I think they need time to look at the numbers and figure out how it will affect them individually”
The legislature’s Budget Committee will discuss the proposal at its meeting on September 3rd with the legislature expected to vote on the plan at its regular meeting on September 9th.