Editorial: City should take county's sales tax deal

Schenectady County leaders are pressuring their counterparts in the city — Democrats all — to accept a change in the sales tax distribution agreement that would give the city an extra $25,000 per year for the next six years, on top of the $11 million it currently reaps. That seems like a fair enough deal given the state of the economy right now, and the city council seems ready to go along. But not Councilman Mark Blanchfield, who thinks the city can do even better and should hold out for more. Even if he’s right, he’s wrong to press the issue.

The interests of both the city and county are best served when they’re getting along, but the city probably has more to lose if it alienates county officials. For one thing, the county subsidizes — to the tune of several hundred thousand dollars — the city’s hazardous material operations, police department and Central Park greenhouse. It’s threatening to withhold those subsidies if the city won’t play ball on the sales tax issue; there’s probably more it could do to make life tougher on the city.

The city could pull out of the sales tax agreement entirely, and levy its own sales tax (as the city of Saratoga Springs did a few years ago — and later regretted it). Schenectady used to do it that way, but never made as much as the $11 million the county gives it every year. There’s little reason for it to expect to do so now — especially with the sinking economy. Sales tax revenues have been rising countywide, but the city’s population has been falling and more development has been taking place in the towns. The city’s lot may improve as downtown recovers, but it’s probably going to be awhile before it could net more than $11 million a year with its own sales tax.

The problem, from the city’s point of view, is that the county wants out of its current commitment to let the city and towns split with it any sales tax revenue above $83.5 million — just as collections seem poised to exceed that threshold for the first time. They may well do so slightly this year, but given falling gas prices and the collapsing economy, it’s hard to imagine them doing so again next year, or in the near future). So the city should take the county’s no-strings counteroffer of $25,000 a year more for the next six years, and be grateful. Blanchfield should not invoke any procedural loopholes, as he has threatened, to block tomorrow night’s vote.

November 30, 2008
4:18 a.m.

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schdy ( no real name given ) says...

Being that the economy is looking very bad it is only logical that we take what we can. If we have to bring in over $83.5 million there is no way we will be going up on tax revenue that will exceed that in the next 5 years.

Everyone I talk to tells me they are buying less.