The Schenectady City Council narrowly approved a new sales tax agreement with the county at the city’s Monday, Dec. 1, meeting, with proponents saying it provides some economic stability for the city and opponents warning that it could prevent the chance for growth.
The agreement, which the Council passed in a 4-to-3 vote, is effective immediately and replaces one written a decade ago that expired on Nov. 30. In the current agreement, the city gives up the right to collect any additional sales tax revenues if the county takes in more than $83.5 million. County officials do not expect to meet that threshold this year.
The new agreement provides the city of Schenectady with a set $11 million each year, as well as $25,000 in sales tax revenues each year for the next four years. That amount is in addition to what the city receives from Metroplex, 30 percent of which is distributed to the towns, which are guaranteed a set $772,064 each year under the agreement.
Under the previous agreement, the towns shared $7.772 million and Schenectady Metroplex received 70 percent of one-half of the sales tax while the other 30 percent went to the towns. After these payments were made, the county collected a tax for itself with a threshold of up to $83.5 million. If the tax exceeded that threshold, the excess would have been distributed to the city, county and towns.
Schenectady County attorney Chris Gardner said he believes the new agreement is fair to the towns, the city and the county.
There’s a modest amount of growth, and I think just this past Monday it was officially declared that we have been in a recession since December of 2006, said Gardner, who added that the agreement provides some stability in the face of the unfunded state mandates passed since 2001.
`Our Medicaid costs have escalated from $18 million per year to over $32 million this coming year, so in order to offset those, the county does need a significant amount of sales tax, but at the same time there’s some growth for all the municipalities in Schenectady County,` said Gardner.
Councilman Mark Blanchfield, who voted against the agreement, said he’s worried such a commitment would stymie growth.
`The economy isn’t going to stay failed forever, and I proposed that if they want to keep the city flat for a few years that’s OK, just give the city a chance to grow some time in the future,` said Blanchfield.
Gardner said the sales tax agreement between the county and the city is in the same vein of collaboration that has existed between the two entities for some time. He thanked the Council for giving the new agreement the OK.
`[The county] has a very good working relationship with the city of Schenectady,` said Gardner. `We collaborate on the police grant, the green house; we are collaborating on the courthouse, and I think in the past five years you’ve seen a really remarkable turnaround in the city of Schenectady with economic development.` “