May, 2006
SALES TAX DISTRIBUTION AGREEMENT IS UNFAIR AND INEQUITABLE

The way Erie County distributes sales tax revenue among cities, towns, villages and school districts may have worked thirty years ago, but not today due to the exodus of the population to the suburbs. The Sales Tax Revenue Distribution Agreement governs how the sales tax is carved up among various governments in Erie County and became effective December 30, 1977. It is no longer valid due to major shifts in population, increased mandates upon county government, and loss of retail services and sales within the cities.

On April 27, 2006, I introduced a resolution calling for the termination of the Sales Tax Agreement. The agreement states that in order to have a new agreement you need to end the old one. And in order to end the old agreement you need to give one year's notice. My resolution begins the process of rethinking the sales tax distribution formula.

Sales tax is a major source of revenue for county government and its ability to provide regional services. Erie County distributes almost two-thirds of sales tax revenue to the cities, towns, villages and school districts. The present agreement provides for 35.3% of the sales tax revenue to be distributed to Erie County, 29% to school districts, 10% to the cities of Buffalo, Lackawanna and Tonawanda, and the remaining 25.69% to towns and cities based on their population.

The December 30, 1977 agreement provides for the cities, towns and villages to use the sales tax first to reduce the county tax levy within the municipalities. Many municipalities have used sales tax to pay for increased spending rather than cost containment.

The recent renewal of the 8% sales tax passed by the Majority in the Legislature provided for the very first time the sharing of $12.5 million in sales tax revenues with nearly half going to Buffalo even though their population is less than 50%. This agreement is inequitable and unfair to towns like Clarence and Newstead. While the three cities receive approximately $215.00 per capita distribution, many of the towns and villages receive well less than $100.00 per capita.

Under the direction of David Rutecki of M & T Bank, a task force including state, county, city and town officials will be meeting to examine the 1977 agreement and present their recommendations later this summer. All Erie County residents deserve a fair and equitable allocation of sales tax revenue to the cities, towns and villages in proportion to their population. We cannot afford to continue this unequal formula in distributing sales tax revenue.