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The Niagara County Legislature's majority caucus isn't willing to raise county property taxes 9 percent in 2005, but 4 to 5 percent might be OK.

After a caucus Sunday, Legislator Danny W. Sklarski of the Town of Niagara said he expects the lawmakers to dip into the county's surplus enough to cut the tax hike proposed by County Manager Gregory D. Lewis roughly in half.

Sklarski, one of three Democrats who caucus with the Republicans, calculated last week that every additional $661,000 spent from the surplus reduces the tax increase by 1 percentage point.

The surplus at the beginning of 2004 was $14.9 million, Budget Director Daniel R. Huntington said last week. Lewis proposed spending $1.5 million of that, specifically to offset some of the projected increase in Medicaid, the largest item in the $261 million budget.

By Sklarski's figuring, lowering the tax increase to 5 percent would require spending an additional $2.64 million from the surplus.

"That would leave you with $11 million in the fund balance," Sklarski said. "If the county uses some fiscal prudence, it should be fine going forward, and we'll save the people from the 9 percent (tax increase)."

Majority Leader Malcolm A. Needler, R-North Tonawanda, said part of the fund balance resulted from sales tax revenues last year being higher than expected. In 2003, the county raised its sales tax by 1 percentage point, with the state ordering that it be devoted entirely to Medicaid increases.

However, the hike took effect three months sooner than the budget assumed. The result was $6.8 million more in sales tax revenue than expected.

"I would think we're definitely looking at spending Medicaid (revenue) for Medicaid," Needler said.

Sklarski said there was talk about dipping into unspent 2004 money that otherwise would be put in the bank, but figures weren't available. Lewis said if there's an operating surplus this year, it won't be known how big it was until sometime in the first quarter of 2005.

The manager warned against using too much of the surplus, saying it's needed in case of problems with cash flow or the county's self-insurance programs.

"We have obligations that are owed against fund balance in areas like health insurance, property and casualty (insurance) and workers' compensation," Lewis said. "This is not a pot of money that sits over in the corner."

Lewis said he wouldn't recommend spending more of the surplus than the $1.8 million cap set in current county policy. The cap is 6 percent of total spending.

"If people aren't willing to pay 9 percent (higher taxes) because it's too high, then I think we have to reduce the price and reduce the operations," Lewis said.

However, the legislators have shown no enthusiasm for Lewis' suggested spending cuts, such as privatizing senior citizen nutrition programs and selling the county golf course. Lewis even left them out of his final budget proposal, instead asking lawmakers to pass resolutions seeking bids on privatization for 2006.

"I'm sure we'll discuss that in 2005," Needler said. "I don't see a need to vote on them in November 2004."


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