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For second time this year, Erie County towns and villages face loss of state aid

For the second time in 2019, towns and villages in Erie County are at risk of losing millions of dollars in state aid.

It's the latest wrinkle in the yearlong fight over a category of direct state aid that Gov. Andrew M. Cuomo initially proposed slashing statewide.

Facing strong objections from mayors and supervisors, the Governor's Office and State Legislature in the spring agreed to find another source to offset the lost revenue from the Aid and Incentives for Municipalities – or AIM – program.

This plugged the financial hole for all of the state's towns and villages – except, it now turns out, those in Erie and Nassau counties.

They have run into a separate, conflicting state law and need the State Division of Budget and State Comptroller's Office to work out a solution.

A Cuomo spokesman vowed governments in Erie County will get all of their promised aid, but local officials are annoyed they're again confronting this threat and at a time when towns are putting the finishing touches on their 2020 budgets.

"We're a little nervous about it," said Orchard Park Supervisor Patrick J. Keem, a Republican who has served as president of the Association of Erie County Governments, adding, "I'll believe it when I see the money."

AIM was created in the 2005-06 fiscal year to pull together various state aid programs for cities, towns and villages in New York, while limiting local property tax growth and encouraging shared services, according to a 2018 Newsday report on the program. AIM doesn't include New York City.

The state had held funding steady at nearly $715 million for the previous seven years, according to Newsday and figures from the state budget division.

In his 2020 budget plan, Cuomo proposed maintaining funding for the state's cities, including Buffalo and Niagara Falls. Because the vast majority of program spending goes to cities, overall AIM spending was set to decline by just 8.3%.

Statewide funding for towns and villages, however, was set to drop by 87.5%, or $59 million, from $67.6 million to $8.5 million. Towns and villages that relied on AIM funding for more than 2% of their budgets were in line to keep this aid.

Cuomo would slash aid program to towns, villages in Buffalo Niagara

In Erie and Niagara counties, that applied to Kenmore ($641,350, or 3.43% of its budget), Sloan ($93,533, or 5.46%) and the Town of Alden ($80,638, or 2.06%).

But 54 of 57 towns and villages in Erie and Niagara counties – and 1,326 communities statewide – were going to lose their AIM funding as spending on the program for those communities here fell from $5.9 million to just $815,521.

Town supervisors and village mayors lobbied state representatives to preserve this aid. In the end, the Governor's Office agreed to let the State Comptroller's Office withhold internet sales tax revenue and pass this money to the affected towns and villages, which would receive the same amount of money they were losing from AIM.

However, the Comptroller's Office reported that in counties with control boards in place – namely Erie and Nassau – the office must distribute sales tax revenue to the boards and can't pass it along to towns and villages.

This upends the arrangement that was supposed to fix the AIM funding problem. The Comptroller's Office recently alerted the affected counties, towns and villages to this problem. Spectrum News first reported on this issue.

"The county is working on behalf of the towns to help resolve the situation. But this is not a county problem to fix – in other words, it is not something Erie County controls; it is a state problem in need of a state solution," Peter Anderson, a spokesman for Erie County Executive Mark Poloncarz, said in an email.

He said the county is trying to work with the budget division, Comptroller's Office and other entities to find a solution before the December deadline to make these payments to the municipalities in question.

This could include the budget division advancing the money – about $3.7 million – to the Comptroller's Office so that the office can make the payments before next month. The state then could recoup this money in 2020 as part of the regular sales tax reconciliation process, Anderson said.

“We will ensure that every locality receives AIM-related funding and every county gets its share of the $210 million in additional new revenues – including those generated by capturing internet sales that have previously avoided taxes," said Freeman Klopott, a spokesman for the budget division.

A letter from the Comptroller's Office to town and village officials in the two counties, however, warns a solution hasn't been found yet and communities need to keep that in mind as they finalize their 2020 budgets.

"Municipalities that rely on this revenue should not be hurt by this complication. We urge the state Division of the Budget to work with the local governments involved so our office can make the necessary payments by mid-December," said Jennifer Freeman, a spokeswoman for the State Comptroller's Office.

In Orchard Park, for example, the town was counting on $119,000 in this AIM makeup aid, Keem said.

"We certainly can't afford to lose it," he said, noting this struggle over AIM comes as towns work under the state's 2% property tax cap and continue to absorb unfunded mandates from Albany.

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