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THE BUDGET DILEMMA <br> UPCOMING DEFICIT WOULD BE BEST BRIDGED BY HIKES IN PROPERTY AND SALES TAXES

Purely as strategy, it's hard to find fault with the effort of Erie County Executive Joel Giambra to force Albany to take some of the heat for the county's budget crisis. It is beyond dispute that every county in New York, including Erie, is being pushed to the wall by the state's high-cost Medicaid program, for which counties are forced to pay half the nonfederal cost.

If the financial pain of a system crafted and controlled by Albany can be left solely on county doorsteps, then Albany has crafted the perfect scam. It will have no reason ever to reform this broken system if it can simply shift political accountability to the state's county executives and legislatures, who have no influence over the size and scope of the program. Anyone who hopes to see the concepts of responsibility and moderation take root in state government understands why that cannot be allowed to happen.

Yet more than strategy must be considered. Giambra's maneuver is pregnant with risks that need to be assessed not just on their ability to focus Albany's attention on its recklessness, but on their local impact.

For example, Giambra wants to plug a looming budget gap of $130 million by raising the sales tax one cent on the dollar. Albany would have to approve that increase, meaning that state legislators and the governor would be accepting some of the responsibility for the county's problem. But the increase would hike the county sales tax to 9 1/4 percent, half-a-percentage point higher than any other county in the state currently charges.

Suffolk and Nassau counties on Long Island each levy a sales tax of 8 3/4 percent. New York City, marching, as always, to the beat of its own drummer, imposes a tax of 8 5/8 percent. The rate of 8 1/4 percent, which Erie now charges, is by far the most common around the state, though rates are below 8 percent in at least 12 counties, including Chautauqua and Ontario.

The other revenue-raising option for the county is to raise the property tax, which, despite the cuts Giambra made in his first term, remains high in Erie County, as it does around the state. Because property valuation includes a subjective component and continually changes, comparing property tax burdens among counties is more difficult than comparing sales tax rates.

Nevertheless, an evaluation by the Business Council of New York State shows that while property taxes in Erie County are not high when measured on a per capita basis, they are above the state average when viewed as a percentage of full value, and, perhaps more telling, when measured as a proportion of total wages. In Erie County, property taxes are 7.5 of total wages, compared to a state average of 5.3 percent.

Giambra says without the sales tax increase, he would have to raise property taxes by 100 percent to close the fissure in the budget. With taxes already consuming a disproportionate share of wages in Erie County, such an increase could be disastrous.

It is important for this debate to continue in order to bring as much pressure to bear on Albany as possible. That is where the problem lies and, in the end, the state needs to reform a Medicaid program that has become ruinous. But that won't happen by early December, when a new county budget must be in place.

That leaves Erie County's elected officials with only unpleasant choices. This page is not eager to see a tax increase of any sort, but there comes a time when reality has to be acknowledged.

Perhaps Giambra and county legislators should take a cue from King Solomon and divide this baby. Budget cuts should be deep enough to hurt but not to disable crucial services. After that, some combination of increases in both property and sales taxes might be the best way to ease the misery that Albany -- including many in our local delegation -- has dealt this county.