OGDENSBURG — With one day left in the state Legislature’s session, city officials are making a final push to have home rule legislation passed before Thursday that would allow the city to collect the final 1% of sales tax.
If not, it could mean a major revenue loss for the city.
City Manager Stephen P. Jellie estimates that dollar figure could be upwards of $1.5 million.
New York is a home rule state. In some U.S. states, known as home rule states, the state constitution grants municipalities or counties the ability to pass laws to self-govern “as they see fit.” In this case, the city is asking the Legislature to grant it the authority to collect an additional 1% of sales tax within the city limits rather than St. Lawrence County collecting the tax.
There are two bills pending in committees right now — an Assembly bill in the Ways and Means Committee and a Senate version of the same bill pending in the Finance Committee, according to Assemblyman Mark C. Walczyk, R-Watertown. Both bills, if passed, would authorize the city to impose up to an additional 1% of sales tax. Gov. Andrew M. Cuomo would then need to sign the legislation into law.
If the legislation fails, St. Lawrence County will continue to collect the extra 1% of sales tax in the city.
Everyone involved is trying to move the legislation beyond committees as the Legislature’s session ends Thursday. But there is a chance the session will continue for a few more days as state representatives scramble to get bills passed.
Mr. Walczyk introduced the Assembly bill while state Sen. Patricia A. Ritchie, R-Heuvelton, introduced the Senate version of the bill. But as north country Republicans in a Democrat-controlled Legislature, there does not appear to be much traction being generated for the legislation.
“It’s home rule legislation, so they’ve requested it and I’m the assemblyman that represents Ogdensburg; we’re carrying the bill in Albany,” Mr. Walczyk said of the legislation Tuesday.
It remains unclear where the county stands on the idea of the city collecting the additional 1% of sales tax on its own. St. Lawrence County Board of Legislators Finance Committee Chairman Kevin D. Acres did not return a request for comment Tuesday.
The legislation was introduced on the heels of stalled talks between city and county officials about the city collecting its own sales tax. The city and county had been going back and forth for nearly two years before the county Board of Legislators ultimately shot down city officials earlier this year as they were seeking an extension of the current formula to further examine long-term options, including pre-empting.
Ogdensburg is the only city in St. Lawrence County and is therefore the only municipality with state-granted authority to negotiate the sales tax distribution formula with the county.
The process to pre-empt — which would allow the city to develop its own formula for collecting sales tax directly from the state — involves legislation at the state level before a formula separate from the county can be implemented. Since the county declined to extend its agreement with the city, Ogdensburg has until November to pre-empt.
Mr. Jellie said the home rule legislation is important to the city because sales tax is a “significant and growing source of revenue” for the city. But regardless of the home rule legislation, the city will move forward with pre-empting, he added.
Mr. Jellie said the formula the county would prefer the city transition to — giving the city the same share in sales tax as towns and villages — the city would have received $1.9 million in sales tax revenue for 2020. Under the current agreement, the city took in $4.1 million last year, he said.
The minimum sales tax rate in New York is 7%. The most common county sales tax is 4%, for a total 8% rate, according to the state Comptroller’s Office.
Four percent of each sale goes to the state while the remaining percentage goes to the local government. Counties can collect additional sales tax revenue, but not without authorization from the Legislature. In August 2013, St. Lawrence County requested and was granted approval from the Legislature to collect an additional 1% in the county. The county’s sales tax rate has been 8% ever since.
Since the first 4% goes to the state, the last 4% of sales tax revenue is distributed to the county. Of the first 3% of the county’s share, the county retains 50% and distributes 6.44% to the city. The remaining 43.56% is distributed to towns and villages based on property value and population. Of the additional 1% in sales tax, the county retains 83.56% and distributes 6.44% to the city. The remaining 10% is distributed to towns and villages based on property value and population.
With the city’s plan to pre-empt, it would take 1.5% of the 3% that goes to the county, according to Mr. Jellie.
If the home rule legislation passes and the city is authorized to take up to an additional 1% of sales tax, the city could collect as much as 2.5% — 1.5% from pre-empting and 1% of additional sales tax.
The last time the city pre-empted was in 2000, and according to Mr. Jellie, the city took in $1.8 million in revenue that year. If the city was given the same share in sales tax as towns and villages in the county as county officials have pushed for, the city would have netted $1.9 million last year — just $100,000 more than collecting its own sales tax 21 years later.
“Why would I believe that I’m not going to make more than $1.9 million 21 years later?” Mr. Jellie said.