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Localities' windfall to cut taxes Officials looking forward to using their revenue from sales tax to ease burden on property owners

Towns, villages and cities that will share an unexpected $12.5 million in sales tax revenue next year say they intend to use the money to cut property taxes.

Nearly every elected official outside of Buffalo who was contacted about the additional revenue said that it would be used for this purpose and not to add services or programs. Buffalo, meanwhile, plans to use nearly $6 million of the money to stay ahead of rising energy bills and to help finance departmental restructurings that aim to improve efficiency.

The extra money is the result of an agreement reached last week that requires the county to share a portion of the "extra penny" of sales tax agreed to in 1985. The Assembly approved the deal Monday, and the State Senate gave final approval Tuesday.

Local municipal officials said they will put the money to good use.

"It will reduce the need for property tax increases," said Town of Tonawanda Supervisor Ronald H. Moline. "It's a nonproperty tax revenue; in the end, that money will help us to provide the best in services at the most affordable costs."

Cheektowaga Supervisor Dennis H. Gabryszak said that because the money was generated by taxpayers, he will look for ways to benefit residents.

"I'm not looking to spend it; we'll use it in some way to give it back to people in town," he said.

Clarence Supervisor Kathleen E. Hallock said she would likely use the town's $330,075 share of the tax revenue to either lower taxes or establish a tax-stabilization reserve. Hallock stressed that she was skeptical about whether these are funds on which the town will be able to rely year after year.

"With one-shot revenues, you don't want to budget according to that," Hallock said.

"I think we have to realize that the county might not be providing as many services. For that reason, we should use it to lower taxes."

And Amherst Supervisor Satish B. Mohan said: "This will go back to the taxpayers."

Although officials had not determined the tax impact, it is expected to be slight.

For example, if Cheektowaga would have received an additional $694,588 in sales tax revenue for its 2006 budget, and if all of it was applied to reduce the tax rate, it would have gone down by about 1.8 percent.

Brian M. Krause, town director of administration and finance, said every $383,750 is equivalent to about 1 percent on the tax rate.

So if Cheektowaga had received the extra share of the sales tax and used it all to lower taxes in this year's budget, the owner of the average home assessed at $53,000 would have saved $19.08 in taxes.

>City targets utility costs

Some municipalities will collect a lot of money. Buffalo, for instance, will get $5.9 million. Mayor Byron W. Brown said the city plans to use some of the additional money to offset rising costs, especially for utilities. Some of the extra money, Brown said, will likely be used to "re-engineer" city departments with an eye toward saving money in the long term.

Brown and other city officials said that it is not feasible for Buffalo to use the extra money to lower taxes. The city is under the watchful eye of a state financial control board, and the panel continues to express concern about long-term budget gaps.

City Finance Commissioner James B. Milroy said utility costs alone will be about $4 million higher than projected in the current fiscal year. Natural gas, electricity and gasoline costs have taken their toll on the bottom line. "Each time gasoline goes up a penny a gallon, it costs us $10,000," Milroy said.

On the other end of the scale is Farnham, population 322, which stands to collect an additional $3,492. Still, the aid will be welcomed by a village government that spends about $280,000 a year.

"When I prepare my budget, and I have to make a differentiation of whether I can put $500 into a sidewalk fund or $600, certainly $3,500 represents an amount of money we can use," Mayor Terry Caber said.

The village's tax rate has remained relatively flat over the years, Caber said, and its share of the sales tax revenue would be best spent on projects to enhance quality of life.

Caber was among the city, town and village leaders urging county lawmakers to share more sales tax revenue with local governments. The Association of Erie County Governments voted, 24-8, last week to support a statement put before it by Brown.

Like his predecessors, Buffalo's new mayor was pushing for a share of the "temporary" sales tax penny that Erie County added in 1985 and the State Legislature reauthorizes each year. This year, Assembly Democrats from the Buffalo area cornered Erie County officials, telling them that if they wanted the penny renewed for 2006, they had to agree to share proceeds in 2007.

Their demand threw the Democrat-controlled County Legislature into weeks of debate. But county lawmakers, under the gun to keep the penny in place beyond March 1, agreed last week to share $12.5 million next year.

>State assistance offered

The formula grants Buffalo the largest amount, 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 will collect about $385,000 and $325,000, respectively. The county's 25 towns and their villages will share the remainder based on population.

The deal is in place for next year only. The legislation must be renewed early in 2008 if Erie County wants to keep levying the penny.

County Executive Joel A. Giambra has warned that sharing the money will create a budget deficit that likely will trigger a property tax increase. In virtually every town and village, he said, property owners, collectively, will return to county government more than their governments would gain in new sales tax revenue.

However, the top Assembly Democrat pushing for revenue sharing, Majority Leader Paul A. Tokasz of Cheektowaga, said he will help Erie County recover the $12.5 million through some form of state assistance. State Sen. Dale M. Volker, R-Depew, made a similar assurance when interviewed by The Buffalo News last week. Tokasz has sent a letter to municipal leaders urging them to use the money to stabilize their taxes.

Erie County Budget Director Kenneth Vetter said the 1978 state legislation distributing sales tax proceeds among local municipalities indicated that they "were to be used to reduce the [local] property tax levy."

"If you give somebody extra money, you should try to put provisions on it so that it's used to curry economic development," he said. "To me, the best economic-development drivers in the municipalities are lowering taxes."

News Staff Reporters Brian Meyer and Emma D. Sapong contributed to this report.

-mail: hmcneil@buffnews.com and mspina@buffnews.com

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