Erie County lawmakers Thursday bowed to pressure from some Assembly Democrats and agreed to share with cities, towns and villages another $12.5 million in sales tax income next year.
Had both sides dug in, taxpayers would have stopped paying the so-called "temporary" penny on the sales tax, and the rate would have fallen by default to 7.75 cents on the dollar come March 1.
But County Hall would have slipped into its second tailspin in two years and would have had to jettison workers to make ends meet. Credit agencies would have reviewed Erie County's already-low bond rating, and the state-appointed fiscal stability authority would have transformed itself into a hard control board.
"I don't want to see a repeat of last year, and the public doesn't want to see a repeat of last year," Legislator Timothy M. Kennedy, D-Buffalo, said during a long floor debate.
During the debate, proponents of the plan said they gave in when key Albany lawmakers vowed to help them make up the $12.5 million in 2007.
"It is, in my view, by no means a disaster for any of the parties involved," said Majority Leader Maria R. Whyte, D-Buffalo.
Soon after, county lawmakers voted, 11-4, to accept the sharing demand that is imposed in identical Senate and Assembly bills. The bills' sponsors agreed that if county lawmakers wanted their temporary penny renewed for 2006, they had to sacrifice $12.5 million of the proceeds in 2007.
The formula grants Buffalo the largest amount, about $6 million, in part because of its population but also because state law classifies cities differently when it comes to the sales tax. The cities of Lackawanna and Tonawanda would collect about $375,000 and $325,000, respectively. The county's 25 towns and their villages would share the remainder based on population.
The legislation must be renewed early in 2008 if Erie County wants to keep levying the penny. Many county lawmakers, however, are hoping that a new task force representing several layers of government -- and spelled out in the state legislation -- comes up with ways to save money and eventually frees taxpayers of the temporary penny, first approved in 1985.
"This is just the beginning of the process," said Assembly Majority Leader Paul A. Tokasz, D-Cheektowaga, whose clout in the Assembly forced county officials to realize that after 21 years they had to surrender some of the revenue to localities.
Tokasz watched county lawmakers debate and then distributed a statement, signed by himself and Assembly Democrats Sam Hoyt, Crystal D. Peoples and Mark J.F. Schroeder, all of Buffalo. All expressed a commitment to help the county save.
The Assembly majority leader also described as "fear mongering" County Executive Joel A. Giambra's prediction that dividing money with municipalities will trigger a property tax increase next year to make up the difference. Tokasz and State Sen. Dale M. Volker, R-Depew, when interviewed Wednesday, said the state can help close the gap.
Even before the Assembly Democrats registered their demand, however, Erie County officials had to find $40 million in savings this year to avoid a property tax increase in '07. Now, they must close a $52.5 million gap, albeit with Albany's help. If they achieve no savings, property owners would face a 28 percent increase in their county tax rate, after this year's jump of about 20 percent.
"This is probably the worst legislation I have ever seen in my history with the Erie County Legislature," said Legislator Michael H. Ranzenhofer, R-Amherst, who also predicted that it will spur higher property taxes. "People are tired of having more money taken out of their pockets."
"They put a gun to our heads," said Minority Leader Barry A. Weinstein, R-Amherst.
Voting against the measure were Weinstein, Ranzenhofer and Legislators John J. Mills, R-Orchard Park, and Thomas A. Loughran, D-Amherst.
The sales tax penny generates $10.5 million a month. Without it, county officials and the state-appointed Erie County Fiscal Stability Authority would have faced a budget gap of $105 million this year and $126 million in 2007.
The Assembly Democrats say they drew their line in the sand because Erie County is one of the few in New York allowed to avoid sharing the proceeds of sales tax increases with its cities, towns and villages. They also wanted Giambra to make good on an old promise to share more sales tax income if the governor and the State Legislature ever saved counties money on Medicaid. Albany officials have since capped the growth of each county's Medicaid bill.
Tokasz weeks ago had insisted that Erie County share $30 million in 2007 if officials wanted their sales tax penny renewed for 2006. After bargaining with Legislature Chairwoman Lynn M. Marinelli, D-Town of Tonawanda, Tokasz dropped the demand to $12.5 million and amended his Assembly bill. He persuaded Volker to go along with a companion bill in the Senate. With the Assembly and Senate in lockstep, the County Legislature had nowhere to turn.
County lawmakers began their work Thursday morning without the 10 votes needed to accept the Assembly offer, or to do anything related to the sales tax because two-thirds of the members were not united on a strategy. Before sharing any money, Legislator Cynthia E. Locklear, D-West Seneca, wanted to empanel a task force of government leaders who would seek ways to save money and eventually drop the penny outright. Two or three other first-year Democrats stood with her. Voting with the Republicans, they could block the formation of a two-thirds majority, which requires 10 members.
Tokasz's offer is firm
Tokasz had already insisted he would not change his offer. Over a speakerphone, he told the clutch of reluctant legislators that he was willing to work with the task force to help recover $12.5 million in 2007; he had included such a panel in his bill. But they had to agree to distribute the money.
Veteran legislators, too, were imploring the holdouts to change course. They had experienced the budget maelstrom of 2005 -- created for want of a sales tax penny -- and were determined to avoid a replay.
"Up until an hour ago today, I was willing to echo many of the comments Legislator Ranzenhofer voiced," Locklear later told the full Legislature, explaining that her stance changed with Tokasz's assurances.
"An hour ago today, Assemblyman Paul Tokasz made representations to us that he is going to find in the state budget the $12.5 million," she said. "I am going to commit today, that if that does not bear out, there will be no permanent vote from me to increase property taxes."