MONTICELLO, NY — As the New York State budget season nears its end, Sullivan County has weighed in on a pair of state proposals—one budget related, one not—that could impact county finances. 

One proposal directly affects the sales tax levels in Sullivan County. 

The state legislature in 2003 passed legislation allowing the county to levy an additional 0.5 percent sales tax, supplementing the three-percent local share the county at base receives, active from June 2003 to November 2005. The legislation has received two-year extensions at regular intervals since then; the 2007 extension included an additional 0.5 percent on top of the 0.5 percent already authorized, leading to a one percent total for all extensions since. 

The one percent addition sets the sales tax for Sullivan County at eight percent overall, four percent of which goes to Sullivan County’s coffers. 

Both increases are currently set to expire on November 30, 2023. The Sullivan County Legislature passed a resolution on February 16 calling on the state legislature to extend both increases to November 30, 2026. 

A pair of bills introduced in the state legislature would extend authorization of the increases until November 30, 2025. Assemblywoman Aileen Gunther sponsored Assembly bill A.3233, and Sen. Peter Oberacker sponsored its counterpart, S.5501. 

“The revenue anticipated from the additional tax will allow the County of Sullivan to continue to provide services deemed vital to the community, while maintaining a balanced budget,” reads a memo appended to A.3233. 

The Sullivan County Legislature held an emergency meeting on March 23 to revise its earlier request. The new resolution mentions A.3233 and S.5501 directly, and calls for their expeditious approval. 

“The County of Sullivan is dealing with significant losses of revenue due to the current economic downturn and the requested extension for the increase is both necessary and in the best interest of the county and its citizens,” reads the revised resolution. 

Both bills are still in committee in their respective chambers. 

…and the state taketh away

Sullivan County’s sales tax is not part of the state’s budget process. The county has also, however, weighed in on a separate initiative that state legislators have debated during their budget negotiations. 

Gov. Kathy Hochul proposed in her executive budget a nine percent, $2.9 billion increase in the state share of Medicaid; according to nonpartisan think tank the Empire Center, the increase is driven by pandemic-related disruptions and by policy choices including higher reimbursement fees for hospitals and nursing homes and wage increases for home-help aids. 

Hochul plans to pay for the increase in part by taking over $600 million in federal Medicaid funding that would otherwise go to county governments. 

The New York State Association of Counties (NYSAC) opposes Hochul’s plan, claiming that county taxes already fund an outsized portion of state programs, such as general assistance, indigent defense and preschool special education. 

“Any suggestion that county taxpayers don’t need or deserve this federal funding is misguided,” said NYSAC Executive Director Stephen Acquario. “New York State took over the growth of Medicaid, then it shifted other costs onto local taxes to shore up its own finances.”

“The governor’s plan to shift yet another $625 million of new Medicare costs onto local taxpayers will make New York even less affordable as counties are forced to cut programs and services to pay for this cost shift,” said NYSAC President Michael E. Zurlo. “We need state lawmakers to listen to their counties and reject this proposal during final budget negotiations.”

The 2023 budget has not been passed as of presstime, with Gov. Hochul sending the legislature a bill extending the deadline from April 1 to April 10. 

Historical echoes

Sullivan County threw its weight behind NYSAC’s call, posting a NYSAC letter to the state legislature about the program on the county’s Facebook page. The post introduced the letter by saying it referenced “a proposal that could drive up taxes if state legislators don’t address it.” 

A footnote in the historic record helps demonstrate why Sullivan County would care about this aspect of the state’s budget.

A 2020 round of Sullivan’s sales tax negotiations highlighted the impact of state mandates on local taxes. At that time, the county legislature voted to ask for a further 0.5 percent increase, bringing the local sales tax take from four percent to 4.5 percent, in part because of the county’s necessity in funding state mandates; the request was ultimately unsuccessful.

“The proposed 2020-2021 Executive Budget threatens to shift millions of dollars in Medicaid costs back to Sullivan County,” said chairman Rob Doherty at the time in a February 21, 2020 press release. “And we continue to stagger under the enormous weight of ongoing unfunded state mandates. Our repeated pleas for relief have gone ignored, so all we have left is the choice to raise taxes or cut services.”