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Slowly but surely, Erie County appears to be losing its status as the tax capital of the Great Lakes.

Combined state and local taxes in Erie County, on a per-capita basis, have fallen below the tax level in several comparable urban counties nationwide, according to new figures released by the U.S. Census Bureau.

And though local-government costs are indeed higher in Erie County than in most places, it's largely because of the county's extraordinarily high education costs.

All of that encouraging news is already somewhat old. Though newly released, the Census data dates from 1997 -- before additional rounds of state tax cuts and radical county tax-trimming by County Executive Joel A. Giambra and the County Legislature.

"However improved these figures look, they would probably be even better now," said Andrew J. Rudnick, president of the Buffalo Niagara Partnership.

That's not to say that government in Erie County is suddenly a bargain. Local-government costs, including schools, increased 23 percent between 1992 and 1997 and are among the nation's highest. And some experts think that per-capita tax rates actually underestimate the burden of taxes on low-income counties such as Erie.

Nevertheless, the Census figures indicate that taxes -- long seen as the noose around the neck of the local economy -- aren't squeezing as tightly as they once did.

In 1992, state and local taxes cost every Erie County resident an average of $2,964. Taxes were higher in only three of 25 comparable urban counties: those including the cities of Hartford, Conn.; Rochester; and San Francisco.

By 1997, though, Erie County had fallen to seventh on the list of the most heavily taxed urban counties. The average county resident paid $3,402 in state and local taxes that year.

Credit for that improvement goes largely to the state tax cuts that Gov. George E. Pataki initiated in 1995 and pushed through the state Legislature every year since then.

New York's per-capita state taxes, which ranked as the nation's seventh-highest in 1992, ranked 12th by 1998 as state government slashed everything from personal income taxes to business levies.

Additional tax cuts in recent years likely will push New York even farther down in future rankings, said Pataki's chief economist, Stephen Kagann.

"I don't really believe people understand how far Gov. Pataki has gone in cutting taxes," Kagann said.

The cost of local government in Erie County actually rose in the rankings just as the state was implementing those tax cuts.

At a cost of $3,344 per person, Erie County's 1997 local-government costs ranked ninth-highest out of 25 counties studied -- up from 11th five years earlier.

"A 23 percent increase in local-government costs in five years is unsettling," said local regionalism advocate Kevin Gaughan, who complained that local schools and public services don't merit their high price tag. "We're paying for Tiffany government and receiving Target instead."

But Charles Swanick, a Democrat who chairs the Erie County Legislature, claims that local-government costs increased in part because the state government pushed programs and costs down to the county and local levels.

For example, since 1989 the state has created two new special-education programs for developmentally disabled preschool children. Those programs now cost about $1 billion a year -- nearly half of which is paid by counties, according to Gay Petri, spokeswoman for the New York State Association of Counties.

"There are more hidden costs now," Swanick said.

But they're all spelled out in the recently released Census of Governments. Released every five years, that census is the most comprehensive study done of local-government spending.

Combining expenses at the county and local levels, that census finds some troubling trends underlying the relatively good news on taxes.

For example, Erie County's per-capita highway costs increased by 30 percent between 1992 and 1997. Spending on hospitals rose 29 percent. And education costs -- which account for 42 percent of local public spending -- jumped by more than one-fifth.

"I think these numbers help explain the election of 1999," said Carl Calabrese, deputy to County Executive Joel A. Giambra, who was elected in that year. "We need to run government smarter."

The most important of those increases came in public education, which cost the average Erie County resident $1,431 in 1997. Not surprisingly, the 21 percent increase in school costs prompted a 20 percent increase in per-capita property taxes -- long seen as the most burdensome levy facing the local economy.

Education experts said rising teacher salaries, particularly in the suburbs, produced those increases. The census numbers cover a period when districts were pushing teachers salaries upward to make teaching a more appealing profession, according to Jacqueline Paone, executive director of the Erie County Association of School Boards.

Costs probably have gone up more slowly in recent years, thanks to worries about tax rates.

"The concern over taxes didn't really hit until the late 1990s," Paone said.

The Census of Governments figures show Erie County's education costs to be the most out of line of any local government services.

On a per-capita basis, education cost more in Erie County than it did in all but two other places: Rochester and Milwaukee.

"You can't make dramatic reductions in the overall cost of delivering local-government services without tackling education and police," Rudnick said.

The recent Who Does What? Commission report on government in Erie County recommending cutting education and public safety costs judiciously.

The report says education costs could be controlled by creating school district "management clusters" to consolidate food service purchasing and other administrative expenses. Likewise, police costs -- which increased 19 percent in five years -- could be controlled by consolidating the county's 26 public safety answering points to about a dozen.

Calabrese said the Census figures are more proof that the Who Does What? Commission's recommendations should be followed.

"Here's what regionalism means That school districts and governments can get together and work smarter, without any school losing its mascot or any town board having to dissolve," Calabrese said.

Swanick, however, complained that the commission didn't consult the County Legislature in preparing its report and said he remains focused on controlling costs for Erie County government alone.

He noted that county taxes have been cut by nearly one-third in the past three years and that county-government employment is at its lowest level since 1965.

Those involved in the Who Does What? Commission counter by saying that, examined from another angle, the Census data provides a much more urgent argument for the entire county to focus on cutting government costs.

Though the Census Bureau figures list taxes and government costs on a per-capita basis, Ken Vetter of the Buffalo Niagara Partnership recalculated the numbers to account for Erie County's comparatively low household incomes and housing prices.

"It's important to look at it this way because taxes aren't so onerous in areas where people have higher income levels," Vetter said.

Examined per $1,000 of home value, Erie County had the second-highest property taxes of the 25 urban counties studied, behind only Rochester.

Total government costs, adjusted to account for average household income, were fourth-highest in Erie County, behind only Fresno, Calif; San Francisco; and Orlando, Fla.

And Erie County's total local and state taxes, adjusted for income, were the highest of the counties studied, despite the early years of the Pataki tax cuts.

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