Mayor: Very bad things will happen if city loses sales tax

ktx sq shayne galloIn a last-minute move pushed by Mayor Shayne Gallo, the Common Council on Tuesday night passed a resolution calling on state lawmakers to convene a special session to restore the county’s full 4 percent sales tax. The resolution passed after Gallo addressed the council to warn of dire fiscal consequences if the state Assembly, now in summer recess, failed to act to restore a 1 percent extension of the tax.

What Gallo described as a “crisis” comes in the wake of a standoff between County Executive Mike Hein and Assemblyman Kevin Cahill over the Safety Net welfare program. Unique among New York counties, Ulster places the onus of funding the program, which provides a small cash benefit to those who have exhausted all other public-assistance programs, on the municipalities in which recipients reside. As a result, Kingston and a few other communities with a large proportion of low-income residents have to deal with far greater Safety Net costs than better-off towns.

Earlier this summer, Cahill forced the issue when he blocked a home rule request renewing the 1 percent extension of the sales tax unless county lawmakers and Hein committed legislatively, to an earlier proposal from Hein for the county to take over Safety Net gradually over the next three years. (Ulster County is technically authorized to levy a 3 percent sales tax alongside the state’s 4 percent; the 1 percent extension was first enacted in 1993 and reauthorized by the legislature every other year.) Cahill, who also wants the county to take over the cost of running elections from municipalities, has said that he expects the Assembly to convene in September to take up the request, but only Gov. Andrew Cuomo has the authority to call the legislature into a special session. Hein has warned that if the request doesn’t make it through, the county stands to lose millions in tax revenue.

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A grim picture of a fiscal tailspin

In his address to the council Tuesday evening, Gallo painted a grim picture of the consequences if the Assembly fails to act. According to Gallo, the loss of the 1 percent extension for one fiscal quarter would cost the city $750,000. If the tax is not restored for a full year, the city would lose $3 million. (By way of comparison, the city levied over $15 million in property taxes to partially fund the $36.8 million 2013 city budget.) Gallo warned that layoffs could start as early as Dec. 1 and eventually lead to the dismissal of 40 city employees. The layoffs, he said, would create a fiscal tailspin with the city on the hook for millions more in vacation accrual payouts and unemployment benefit costs.

“We will literally be $5 million in the hole if we don’t get that extension,” said Gallo.

The council passed the non-binding resolution 8-0. (Alderman Matt Dunn, D-Ward 1, was absent) but not before Elisa Ball (D-Ward 6) added an amendment expressing support for the county’s takeover of Safety Net costs. Majority Leader Tom Hoffay (D-Ward 2) who works in Cahill’s Kingston district office, rose to point out that the resolution did not target Cahill or any other politician but merely called for the maintenance of the sales tax extension. Gallo meanwhile expressed cautious optimism that the Assembly would indeed reconvene to pass the home rule request.

Kevin Cahill. (Photo by Dan Barton)

Kevin Cahill. (Photo by Dan Barton)

“We need to send a signal to let our assemblyman know this is a crisis,” said Gallo. “I don’t think he wants that as his legacy after all of those years of good service.”

Cahill could not be reached for comment before press time.

Also at Tuesday’s Common Council meeting:

  • The Council unanimously approved a request from Gallo to pursue $4.43 million in state grant money for a number of projects. The requests, bound together in the Consolidated Funding Application, or CFA, are spread over eight separate grants. Five of the grant requests and the bulk of the money would fund “connectivity projects” linking the city’s rail trails and creating new bike lanes and streetscape improvements to make city streets more bike- and pedestrian-friendly. Another $100,000 grant would be used to create an added incentive for private investors to redevelop the former site of a municipal parking garage in Uptown Kingston. The grants call for a local match of nearly $2 million. But the plan calls for the entirety of matching funds to be paid from complementary grants. An amendment added by aldermen calls for all grant requests to go back to the council for final approval in the event the matching funds are unavailable.
  • The council approved the sale of six surplus properties — 19 Tenbroeck Ave.; 146-150 Wilbur Ave.; 138-140 Prospect St.; 46 Maple St.; 225 Abeel St.; and 9 Alcazar Ave. — currently held by the city for nonpayment of taxes. Alderman Bob Senor (D-Ward 8) objected to the sale on the grounds that none of the agreements contained a reverter clause to allow the city to take back the properties in the event the new owners do not follow through on commitments to renovate, or in one case demolish, dilapidated structures. Corporation Counsel Andrew Zweben said that the reverter clause was unnecessary since all of the purchase agreements already including binding language requiring the new owners to fulfill their responsibilities.
  • The council unanimously approved a $1.25 million bond resolution for the Water Department to replace three deteriorating water mains near the CSX tracks in Midtown Kingston and repaint a water tower on Florence Street.

There are 6 comments

  1. gerald berke

    Good article, got some nice specifics in there… not clear when the assembly has to do it’s work against how the money starts leaking out…
    very very interesting how sales tax compares to property tax… 15 mil from all property taxed and 3 mil from a (small?) portion of 1% of the county.. is that right? however regressive sales taxes are, (I think that is more theoretical than empirical) property taxes are very very destructive to the stability of home ownership not to mention money that cannot be spent locally by the people: I have to spend $100K before a 1% sales tax hits me like a $1000 property tax…
    If it is all as dire as it seems, it has to be a “slam dunk” that the assembly will do it’s job… there is no reason not to… so this will turn out to me a non problem.
    Again, not clear when the clock starts running.

  2. nopolitics

    This is an “unfunded state mandate”(ie, the Safety Net program), which was never at any point in time ever seen in politics as an issue for the Democratic Party. Fiscal realities in recent years render this issue touchable by everyone now–even Democrats previously allergic to the basic issue. What anyone will do with this newfound issue as a “legitimate” issue(well almost–as much as the Catholic church does much about poverty itself besides erecting nice tributes in engravings saying “To all those who died in the struggle of poverty” on the lawns of the old St. Joseph’s School Convent cum Catholic Charities Building– remains to be seen(county legislators are mostly poor just by their own salaries–but what about Hein and those employed in his office(no–not a one comes under that category). Here we have a real burden on the localities which the county should have taken over but for some odd reason in Ulster County never did(and why did this never hit anyone’s radar screen at the state level before is a salient question–or did anyone act before–could it be all those Elitist Catholics in politics–who of course see themselves and their educational achievement ethics as paramount to everything(which Cahill always had himself)just, like the church as an organization itself, could never completely come to grips with actual need out there and the need to reasonably meet the need? I’d place my bets on the avoidance of this for such a long time….on the mentality as described right….THERE!!! This mostly fosters a sense of perennial BIGOTRY(read Sottile’s blog posts describing this mentality well at www.yuku.com /ulsterpublishingmessageboards under the name “Black Knight”)–which at least Cahill is now addressing by putting the issue out there to finally address instead of ignore forever. Without that—these other ones who do nothing but sit on their behinds forever while collecting salaries such as 130 thou per annum like Mr. Hein should be seen as enough of a disgrace so that no one should allow these bums like Hein to continue their professional politician bummery anymore. SOMEONE had to light a fire under his sorry /disgraceful butt of one that is so in love with himself that he can’t smell his own slumbum shit!! We need look no further than our own backyard to perceive a mentality that fosters— and reinforces—a social caste system of the sort and widespread level that the entire nation appears to be in a more or less permanent grip of–such as has apparently not happened before in the whole history of the whole history of this nation at least, apart of course from its slave past and racial bigotry inculcated thereupon.

  3. Where were you Mayor Gallo

    Mr. Mayor you say very bad things will happen. What did you do personally to prevent this? Were you aware that Mr. Hein and Mr. Cahill were having this issue? Did you turn a blind eye or worse, take a side? Why didn’t you lead and try and resolve the problem, after Mr. Hein you stood to lose the most.

    Incompetence and Political gamesmanship by Hein and Gallo is what is at play here. So if very bad things happen, I sure hope the press does a 180 and starts pointing the finger of blame where it belongs, squarely on Mike Hein for allowing this to happen. He is the one an only person who had the ability to
    rectify this problem and he did not. Cahill was doing what a good State Representative should be doing.

    1. BRODE

      I laughed at the comment ” Bad things will happen to Cahill , last time we checked Kevin Cahill is working hard in Albany while Kingston falls apart before our very eyes by who? I suggest the gate keeers put on their big boy pants and attemp to work as hard as Kevin does maybe Kingston wouldn’t be in the condition it’s in . Just saying

      1. gerald berke

        This is silly: Kingston is in full bloom. While the mayors view on the matter of Cahill and taxes are not mine, on the wellbeing of KIngston there is no doubt that Mr Gallo works really hard, loves his city, and is a strong force in encouraging and welcoming public involvement with fine results.

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