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March 29, 2021 - 6:58pm

County manager sounds off against sales tax diversion, misguided cannabis excise tax distribution

posted by Mike Pettinella in news, notify, New York State Association of Counties.

Update: March 30, 1 p.m.

County Manager Matt Landers provided the amount of sales tax that New York State will divert from Genesee County for 2021 to be used for Fiscally Distressed Health Facilities/Other State General Purposes (FDHF-GF) & Aid and Incentives to Municipalities (AIM)-related Payments:

FDHF-GF Sales Tax Diversion

January 15, 2021 -- $251,636

Rest of calendar year 2021 -- $185,632     

Total -- $437,268

AIM-related Payment Sales Tax Diversion

May 2021 -- $69,124

December 2021 -- $234,489

Total -- $303,613           

Grand Total -- $740,881

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In the Genesee County manager’s eyes, it seems as though the more New York State gets, the more New York State wants.

Matt Landers today said he supports the New York Association of Counties as it attempts to reverse a recent local sales tax diversion law that, according to NYSAC, is removing more than $59 million a year from communities across the state.

“I’m in full agreement of the push by NYSAC to stop this diversion, especially in light of the fact that the state has been given funding through the federal stimulus to assist with nursing homes,” Landers said. “There really isn’t a need to divert county sales tax to go toward assisting distressed hospitals and nursing homes.”

Earlier this month, Congress passed the $1.9 trillion American Rescue Plan Act and appropriated $23.8 billion to New York, with more than half of that going directly to the state government.

Landers emphasized that sales tax is a major source of revenue for more than half of the NYS counties, and also for towns, cities, villages and school districts that have sales tax sharing agreements with their counties.

In 2019, local governments shared $2 billion in local sales tax revenues, NYSAC reported.

The county manager said some municipalities had their state Aid and Incentives to Municipalities funding reduced or eliminated and then put back in – with sales tax diversion cover their AIM – and some will receive their full AIM.

“The governor’s proposal had it so that the AIM will be covered by sales tax diversion, but the Senate and the Assembly have different versions of that. So, until we see a final bill, I’m not sure what the final impact will be,” he noted. “But the sales tax diversion and the AIM situation are just two more examples of the state taking county sales tax for other purposes."

NYSAC President Jack Marren said local governments, now more than ever, need their full share of sales tax and state Aid and Incentives to Municipalities.

“Strong local governments make for a stronger state, and as New York recovers from the economic devastation wrought by the coronavirus pandemic, it is imperative that those of us who have been serving on the front lines of responding to the crisis be provided with the resources and the flexibility we need for a full recovery,” he said.

In a related development, Landers said he is against the formula being proposed to distribute the 13 percent sales or excise tax attached to the legalization of cannabis.

“The state plans to keep 9 percent of that 13 percent and they’re distributing the 4 percent to municipalities. The problem is that instead of putting it through as sales tax and letting sales tax sharing agreements divvy the money appropriately, they’re providing 3 percent directly to towns, villages and cities, and just 1 percent to counties,” he said.

Landers said that flies in the face of common sense.

“Just think about it? What municipalities are being impacted the most by legalization of marijuana?” he said. “If you look at the services that are delivered, it should go to criminal justice and human services agencies that the county runs – whether it’s the public defender’s office or the DA office, sheriff, the jail, mental health, health department. What does the typical Genesee County town have in services that would be impacted by the legalization of cannabis compared to a county?”

Landers mentioned that he understands some cities are planning to use income from marijuana legalization to pay for programs unrelated to what likely will arise from the increased usage of pot.

“The money should be to fund unintended consequences from the legalization of marijuana. There are going to be public health and other effects – just like the VLT (Video Lottery Terminal) money that was given to municipalities that have gambling in their areas,” he said. “That doesn’t mean that you go and create a new, unrelated program and put the money there. It should be used to offset the societal costs that you’re going to be hit with as a result of that activity.”

He said that some cities have their “wish list” of things that they want to do and now they have a new revenue stream to do that.

“In Genesee County, we would take that money and apply it to whatever effects it had on our budget as a result of the legalization. Unfortunately, though, I think it’s pretty much a done deal and we’ll have to accept the reality.”

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