One week after declaring that he would take a slow, methodical approach to renegotiating a sales tax revenue-sharing agreement with Ulster County, Kingston mayor Steve Noble changed his mind. He said Friday, Feb. 12 that new information has created new sense of urgency on the issue.
The five-year-old sales tax agreement, which governs the division of about $110 million in annual revenue, is set to expire on March 1. Under the current scheme, Ulster County government keeps 85.5 percent of a 4 percent county-wide sales tax. The City of Kingston gets 11.5 percent of the total. Ulster County’s 20 towns share the remaining three percent based on assessed property values.
At a meeting of the county legislature’s Ways and Means Committee earlier this month, committee Chairman Richard Gerentine proposed reducing Kingston’s share of the sales-tax money to 10 percent and the towns’ share to 2 percent.
Gerentine and some other county-level officials have suggested that the readjustment was warranted because of the county’s assumption in recent years of welfare and election costs that had been previously paid by the towns.
Backers of the county’s clawback effort have accused the towns of spending or hoarding the savings instead of passing them on to taxpayers. County Executive Mike Hein made the criticism explicit in his state-of-the-county speech last week when he accused Ulster County’s municipalities of failing to follow the county’s lead in reducing costs and restructuring government.
As a “pre-empting” city with the power to impose its own sales tax, Kingston can renegotiate the revenue-sharing agreement with the county. The city would lose about $1.6 million annually under Gerentine’s proposal. That, Noble said, would leave a hole in the city budget that would require major reductions in city services or a steep property-tax increase. Noble and representatives from nine Ulster County towns have called for the current revenue-sharing agreement to remain unchanged.
Earlier last week, Noble had called the Feb. 29 deadline for signing a new agreement flexible. He suggested that the city would have until June, when the sales-tax agreements must go to state officials, to hammer out a new revenue-sharing scheme. Noble said that the city should not be rushed. He said that he planned to take time to educate taxpayers about the importance of the sales tax to the city’s finances.
At a press conference last Friday, however, Noble backtracked. Following a discussion with officials at the state comptroller’s office, he said, he now believed it was necessary for the city to wrap up negotiations by the end of February. If the agreement were allowed to lapse, he said, the county would still have to share 14.5 percent of sales-tax revenue, but absent an agreement could unilaterally decide how to parcel out the funds.
“They could choose to disburse it in any way they wish after that contract expires,” said Noble. “They could decide to do it by population. They could decide to do it by assessed value. They could decide to give us 5 percent and the towns 10 percent.”
The state comptroller’s office’s view, Noble said, appeared to conflict with that of the state Department of Taxation and Finance, which had said that the revenue-sharing agreement would remain unchanged, regardless of a contract, until May 30. Noble said the differing opinions illustrated the complex nature of the sales-tax issue and the need for careful deliberation.
Noble reiterated his call for a new five-year contract that would leave the county, city and town shares unchanged. “There are so many factors that are unknown related to the sales tax, it’s not something that should be decided lightly” said Noble. “We do need years to figure out a change in the sales-tax agreement.”
Noble also used the press conference to push back against claims that the city had not done enough to cut costs and restructure government. Working off a memo prepared by City Comptroller John Tuey, Noble ticked off a series of cost-cutting measures undertaken by his predecessors between 2008 and 2016 that had reduced the cost of delivering city services.
Tuey’s memo noted the elimination of 63 full-time positions from the city’s workforce since 2008. The reductions had saved the city about $4 million (Editor’s note: the print edition of this story and the online version, up to 2 p.m. on Feb. 22, had this figure as $400,000; the Kingston Times regrets the error.) annually. The memo went on to cite energy efficiency improvements that had cut utility costs. New contracts had reduced overtime and boosted employee contributions for health care. Tuey also pointed to single-stream recycling, consolidation of services and more competitive bidding for contractual services as factors in reducing the cost of city government. Tuey added that bond rating agencies had recognized the city’s efforts by upgrading Kingston’s bond rating from “A” in 2010 to “AA-“ in 2014.
“We are doing more with less,” Tuey wrote. “Over the last eight years, despite a prolonged recession and the implementation of the state tax cap, the city has negotiated a difficult financial environment well.”
Noble called criticism of the city’s financial stewardship “misinformation.” He added that the city had managed to remain under the state’s two percent tax cap despite ever-increasing costs of employee health insurance and other mandated expenses.
“When you look at all of [the cost-saving] measures and juxtapose it with the sales tax, I see a real issue here,” said Noble. “This city needs a secure source of revenue to make it through the next couple of years, and I need the county to recognize that.”
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