Ulster County losing $500K a week due to sales tax rate drop
Jay Braman Jr.
The failure of state and Ulster County officials to reach an agreement over how to pay for local welfare costs has resulted in a reduction in the county’s sales tax from eight percent to seven percent, just in time for the holiday shopping season.
While that might be good news for consumers, however slight, Ulster County Executive Mike Hein said that, starting on December 1, his government started losing $500,000 in revenue each week because of the debacle.
The problem began last spring when State Assemblyman Kevin Cahill, whose 103rd District contains much of Ulster County, blocked the passage of a bill that would allow the county to temporarily increase its share of sales tax from three to four percent. Combined with the state’s share, this put the sales tax at eight percent.
At the time Cahill blocked the bill, which would have allowed the tax hike to last for the next two years, because Hein had not yet made good on a commitment by his administration to take over the town-level costs of the county’s safety-net welfare program. Cahill also wanted to see Ulster County take over all local election costs within county borders.
For months afterwards, a battle of words between Hein and Cahill ensued, but then the clock ran out. Without state legislative permission, Hein was unable to keep the sales tax at eight percent, where it had been ever since county officials first applied for the “temporary” tax increase back in 1992.
After the deadline, the county legislature officially adopted Hein’s 2012 plan to take over all the costs of the Safety Net program by 2015. They have also made a commitment to adopt a county budget for 2014 that calls for the county to take over 66 percent of those costs in 2014.
Now satisfied, Cahill says that once the county legislature adopts a new resolution requesting the additional tax, he will work with his colleagues in the state assembly for the earliest possible consideration leading to passage of legislation, of a bill authorizing the county to levy the tax through the end of 2015.
However, the state legislature does not meet again until January.
It is hoped that the county can increase the sales tax on February 1.
Hein says if they wait any longer than February 1, county services will need to be cut.