Council members digesting sales tax deal

County Executive Mike Hein. (Photo: Dan Barton)

County Executive Mike Hein. (Photo: Dan Barton)

One week after County Executive Mike Hein and Kingston Mayor Steve Noble announced a deal for a new five-year sales tax revenue sharing agreement, members of the Common Council said they were still trying to understand the complex, multi-faceted pact. But with a June 1 approval deadline staring aldermen in the face, it’s unclear what, if any, changes the council will be able to make to the agreement.

The deal hammered out by Noble and Hein ended a months-long standoff over how the county shares proceeds from the 4 percent it gets of the total 8 percent sales tax. Under a previous agreement, the county retained 85.5 percent of the total, the City of Kingston received 11.5 percent and Ulster County’s 20 towns shared the remaining 3 percent, divvied up according to each towns’ property tax bases. That agreement expired in March; controversy and debate arose after some county lawmakers suggested giving the county a larger share while Noble and town officials demanded a new five-year agreement leaving the proportions unchanged.

The resulting deal maintains the status quo through the end of 2017. Starting in 2018, the city’s share will be capped at 11.5 percent of the 2017 sales tax haul in a so-called “growth freeze,” with the county retaining any excess revenue. The deal is expected to transfer an estimated $750,000 in sales tax revenue from city to county coffers over the course of the final three years of the pact. The proposed deal also penalizes the city and the towns if a 1 percent “extension” is not approved by the state. In 2013, Assemblyman Kevin Cahill held up the extension in a bid to hasten the county’s takeover of Safety Net welfare and election costs that were previously borne by municipalities. The clause in the sales tax agreement would presumably discourage similar moves in the future by ensuring that Kingston and the towns would bear the brunt of any revenue loss from a suspended surcharge.


The deal also includes some merging of services and shuffling of responsibilities between the county and the city. Among the changes, the city will assume maintenance costs for the Greenline, a 1.2 mile long “linear park” under construction by the county in Midtown Kingston. The proposal also calls for a merger of Kingston’s Citibus and the county’s UCAT bus lines, provided there is no extra expense to the county. The county will turn over its impound lot on Golden Hill to the city to go back on the tax rolls and for potential development. The city in turn will take over some impound duties for the county.

It’s a complex deal and several city lawmakers, who along with their counterparts in the county legislature will have to approve the agreement, said that they were still trying to understand its nuances. Council Minority Leader Deborah Brown (R-Ward 9) said she had a number of concerns about some of the language in the agreement and looked forward to a May 18 committee meeting where City Comptroller John Tuey is expected to answer questions.

“At first glance, I’ve got a lot of questions,” said Brown. “I’m looking out for the city’s well-being.”

While Brown expressed skepticism about the agreement, Majority Leader Bill Carey (D-Ward 5) said that the proposal might be the best deal the city could get. Carey said the deal represented a compromise with county lawmakers who had proposed outright cutting the city’s share back to 10 percent.

“I think there are enough county legislators who don’t see Kingston as a priority who would make things much more difficult than the deal we have now,” said Carey. “The fact that we’re not losing anything is huge.”

Steve Noble. (Photo: Phyllis McCabe)

Steve Noble. (Photo: Phyllis McCabe)

Finance Committee Chairman Doug Koop (D-Ward 2) will guide the committee’s discussion of the proposal later this month. Koop said that he had already spoken to Tuey and examined the comptroller’s projections on the agreement’s fiscal impact. Koop said that maintaining the 11.5 percent share was a win for the city. But he noted that the city stood to lose significant revenue if the state failed to grant the 1 percent extension.

“I understand that a lot of work went into this between the county and the city and I think it needs the benefit of discussion [by the council],” said Koop. “I can’t vote for it unless I understand it and I feel I’m understanding it better and better.”

But lawmakers have limited time to make any changes. The state-mandated deadline for the agreement is June 1. By then it will need approval by the council, the county legislature and sign-offs by both Hein and Noble. Any changes would also need to be vetted by the Office of the State Comptroller. OSC approval of the agreement now on the table came only after several weeks of back-and-forth between state and local officials regarding exact wording of the proposal. Any effort to alter the agreement could lead to a similar delay. Koop acknowledged that the looming deadline would make any changes to the agreement difficult.

“Obviously, it would get very, very messy if we had to do that,” said Koop.

Auerbach: Maybe some hearings?

County Comptroller Elliott Auerbach says the county legislature should consider conducting public hearings on the sales tax agreement negotiated between Kingston Mayor Steve Noble and County Executive Mike Hein, announced on April 27.

Auerbach, who said his staff has been studying the agreement since it was released, was responding to questions from Kingston Legislator Dave Donaldson on what Donaldson termed a “quite complex” document.

Auerbach’s answer, in part, was that he too has made inquiries with the mayor and executive, but hasn’t received answers. Reached by phone, he suggested the legislature, which is expected to vote on the pact this month “should insist on a clear, straightforward and transparent understanding from the two elected officials who penned [this] agreement.”

On April 27, Auerbach asked the mayor to “quantify your savings once city transit becomes blended into [county bus operations] and if that offset could compensate for any potential exposure.”

County Comptroller Elliott Auerbach. (Photo by Dan Barton)

County Comptroller Elliott Auerbach. (Photo by Dan Barton)

Donaldson also questioned whether “penalty clauses” [exposure] in the proposed contract are “less a business decision and more a political one.”

On April 28, Auerbach wrote county Finance Commissioner Burt Gulnick to “provide a mathematical exhibit or mathematical flow chart that accompanies the sales tax agreement.” The county supervisors’ and mayors’ association made a similar request.

“I’m still waiting,” Auerbach said.

Donaldson’s inquiry, delivered to Auerbach Tuesday morning and which he made public that afternoon, deals with specific questions, distribution schedules and the like that the comptroller, lacking pertinent information, said he is unable to address at this time.

Interviewed Tuesday, Hein said he was “proud of the work” his team and Noble’s team did in hammering out the pact, and praised the mayor’s professionalism. Hein stressed that the agreement “balanced the interest of many different groups” and pointed to its approval by both the State Comptroller’s Office and the state Department of Taxation & Finance as evidence of its quality.

While Donaldson has expressed severe skepticism over the deal, fellow Kingston Legislator Jennifer Schwartz Berky said she hoped “a more collaborative solution” could be worked out. “I feel that the mayor did a good job in very difficult negotiations and sought as much stability for the city as possible, given the political realities,” she said. “We will still suffer as a diverse community that is the heart of our county and bears more than the fair share of burdens. I had reservations about the timing of these negotiations and the incorporation of the concerns of the town supervisors. To be clear about my position on the vote: I am still looking for a more collaborative solution with fellow legislators to share the burden and protect the fiscal health of our communities to the greatest extent possible.”

Hugh Reynolds and Dan Barton