Which of the following statements is true:
- The Erie County tax rate has either stayed the same or fallen in each of the past 10 years and consistently been under the state tax cap.
- The county has raised property taxes by 4 to 5 percent each of the past two years, with a tax increase of 5.35 percent expected in 2018.
The answer: Both.
How can this be?
Some legislators and the county comptroller point to "tricks and gimmickry." Budget figures show the county recorded a bigger tax leap last year and this year than any year since 2009.
The County Executive's Office credits the limited tax growth to fiscal prudence, targeted tax cuts, rising expenses, preservation of county services and widespread economic growth.
The county's general fund spending has grown by more than $78 million dollars over the last five years – and is projected to grow by $31 million next year. But the county has benefited from rising property values, lower employee benefit costs and rising sales tax revenue.
It also has benefited from short-term financial windfalls and revenue relabeling that occasionally prompts Republican legislators to accuse County Executive Mark Poloncarz of propping up a high-spending administration with unsustainable resources.
"Why not, instead of looking at gimmicks to get under the tax cap, why not cut taxes?" asked Joseph Lorigo, chairman of the Finance Committee Chairman, at the start of budget hearings. "For the second year in a row, the administration has resorted to gimmickry to get under the tax cap."
The Poloncarz administration calls its proposed budget for 2018 a no-frills, glamour-free spending plan that demonstrates fiscal responsibility and tax savings efforts.
"The budget reduces the tax rate by a penny and stays underneath the New York State tax cap," Poloncarz said when he first rolled out his budget plan. "We knew it was going to be a tough budget to do that, but we were able to do so by some good fortune, which is the assessment growth that we had, plus the sales tax growth that we had."
So how has the county managed to stay under the state-imposed tax cap and reduce tax rates while still increasing spending to covering costs associated with county programs, services and personnel?
Here are some ways:
Rising property values: As property values rise across the county and new construction puts high-value properties on the tax rolls, the county has been able to reduce the tax rate – the amount of money the county charges for every $1,000 of assessed property value – and still collect more tax money overall.
So if your $100,000 home's value remains unchanged from this year to next year, the proposed 1-cent decline in the property tax rate for 2018 would result in a $10 decrease on your property taxes.
But the more likely scenario, given the overall rise in property values across the county, is that your house will grow in value next year, and you will pay more in taxes. Consider that over the past 10 years, overall county property values have risen by more than $10 billion. But the tax rate has only fallen by 9 cents per $1,000.
That's means more tax money gets funneled to county coffers to pay for county expenses.
Converting taxes to fees: The state gives local governments the right to exclude certain fees from property tax cap calculations. So over the last three years, the county relabeled roughly $20 million collected in "sewer taxes" from the county's seven sewer districts as "sewer fees."
This doesn't change the amount the county collects, or how much you have to pay, but it gives the county more breathing room to collect money from taxpayers without it counting against the state cap. The last sewer district to convert some of its taxes to fees did so this year.
"There are no more sewer districts to raid," Comptroller Stefan Mychaljiw said.
Hospital cash: Erie County has been crushed each year by tens of millions of dollars it gives Erie County Medical Center to pay for uninsured and underinsured patients. But this year, in a controversial borrowing arrangement, the county agreed to help the hospital borrow money at a cheaper rate through the county control board in exchange for the hospital paying a $17 million fee to the county for its assistance.
That money will help offset the county's ECMC payments for the next four years. Comptroller Mychajliw decried the maneuver as "stealing from the poor" and an unsustainable way to address the "train wreck" costs associated with the hospital.
Poloncarz pointed out that his Republican predecessor, Congressman Chris Collins, executed a similar maneuver when he was county executive.
Lowering taxes: The county has reduced the tax rate for each of the last three years, This year, it is absorbing $3.6 million in community college-related taxes it could have charged to cities and towns next year.
The community college "chargeback" tax disproportionately hurts towns and cities that have more students attending community colleges outside of Erie County, said Budget Director Robert Keating. The county must partially reimburse these colleges for enrolling non-county residents. Until now, the county has turned around and passed on that cost to the towns where these students reside.
But Poloncarz in 2018 wants the county to only charge the towns and cities slightly less than half of the chargeback tax. The county would absorb the remaining $3.6 million this year in order to stay under the tax cap.
"We're addressing an unfair levy," said Keating, pointing out that some counties don't charge local governments for this cost. "That's the way I look at it."