Kingston Mayor Steve Noble said this week that he won’t be rushed in talks with the county on a new sales tax-revenue sharing agreement. Meanwhile, supervisors in nine of the county’s 20 towns — which also receive a portion of the sales tax revenue stream — are urging the city to stand firm against county government’s bid to take more of the $109 million annual haul for itself.
Of the total 8 percent sales tax levied in Ulster County, the state keeps half. The remaining four percent, about $109 million a year, is shared — the county gets 85.5 percent, the City of Kingston 11.5 percent (a little under $13 million annually) and the towns share the remaining 3 percent, based on total property value. A 2011 revenue-sharing agreement is set to expire at the end of the month. Last week, county Legislator Rich Gerentine, who chairs legislature’s Ways and Means Committee, presented a proposal that would reduce the city’s share of the sales tax money to 10 percent and the towns’ to 2 percent. If that happens, Kingston stands to lose about $1.6 million in revenue each year while the towns’ share would drop by about $350,000.
Based on its status as a “pre-empting city,” it’s now up to Kingston to negotiate a new revenue-sharing deal. Kingston introduced a sales tax in 1967, a decade before the county. Thus, it retains the right to re-impose its own tax and deny the county any share of revenue generated inside the city. The county would keep for itself all sales tax revenue generated outside of Kingston.
Such a scenario would likely lead to large financial losses for both the city and county, based on several factors. First, the 1 percent sales tax extension granted by the state would disappear. That means the overall sales tax in the city and the county would drop to 7 percent with the state taking four and the respective governments seeing their share drop from 4 to 3 percent. Noble said that based on his reading of the law, he believes both the city and the county could be further limited to levying a 2 percent sales tax, leaving both to contend with a 50 percent drop in revenue. The towns, meanwhile, could be left with nothing since the county is not legally required to share the revenue.
The precise fiscal impact of separate city and county sales taxes is impossible to determine. Sales tax revenue is not broken down by the municipality where it was generated, thus no one can say for certain how much Kingston could generate on its own — or how much the county would lose.
Noble said Tuesday that if the county decided not to renew the sales tax agreement and end revenue-sharing, the city would almost certainly impose its own sales tax.
“If the county were to decide to go its own way, we would probably have to go our own way,” said Noble. “It’s the only thing that makes sense.”
In Kingston, where officials have warned that the county proposal would force unacceptable cuts in services or property tax increases, Noble said he planned to approach the negotiations methodically. While the revenue-sharing agreement expires on Feb. 29, Noble said the deadline for reporting a new sales tax scheme to the state is June 30. In the interim, Noble said, the existing agreement would remain in effect.
Kingston Common Council President James Noble had last week complained that county officials appeared to be rushing the city towards a pre-determined outcome. But Steve Noble said he saw no cause for haste.
“Feb. 29 is no longer a deadline, we have months to discuss the issue,” said the mayor. “We have months to educate the taxpayers about the process and the importance of the sales tax revenue to the city and our ability to deliver services.”
Show of solidarity
While the city and the county head for the negotiating table, representatives from nine Ulster County towns met this week to urge the new mayor to hold fast on the status quo. On Monday, nine members of the Ulster County Association of Supervisors and Mayors met with Noble and county Legislator Manna Jo Greene (D-Rosendale) at the Olympic Diner in the Town of Ulster. At the meeting, all nine voted in support of the current revenue-sharing scheme. At the meeting, Woodstock Town Supervisor Jeremy Wilber questioned why the county appeared so intent on altering an agreement that has remained unchanged since 2001, when the city negotiated a 1.5 percent boost in its share and the towns got an extra 1 percent.
“Why is the county doing this at this time?” asked Wilber. “Is there a financial crunch?”
In introducing the proposal, Gerentine said the county’s assumption of all costs associated with the Safety Net welfare program as a primary concern. Prior to the county takeover over a three-year period beginning in fiscal 2013 and finished by fiscal 2015, the welfare costs were charged back to the towns where recipients lived. Ulster’s scheme, unique among the state’s 62 counties, led to poorer communities like Kingston taking on a larger share of welfare costs. Now that the county assumes the entire Safety Net burden, about $7 million annually, Gerentine and his supporters argue, the county deserves to get more money from the sales tax.
Other county officials, including those working for County Executive Mike Hein, have complained that municipal governments have spent the Safety Net savings, rather than pass them along to residents in the form of lower property taxes.
Several supervisors present at the Monday meeting took exception to that rationale. New Paltz Supervisor Neil Bettez noted that his town had reduced the town’s budget by 9 percent over the past four years. Rochester supervisor and association president Carl Chipman said previously that the sales tax money funds important programs, like his town’s after-school program for working mothers, which would be impossible to provide otherwise. Chipman also dismissed the notion that the county should get extra revenue based on the Safety Net takeover.
“I don’t see that as a matter of the county doing us a favor,” said Chipman. “That was them doing what they should have been doing all along.”
Join the family! 
