Allegany County surplus soars while it declares ‘necessity’ to keep its high sales tax rate

EXCLUSIVE: Allegany County’s state legislative representatives are being asked again to work at retaining the county’s third highest sales tax rate in the state at the same time as the government’s surplus escalated by more than $16 million, or nearly 50 percent, last year.

The new unappropriated fund balance of nearly $48.8 million is enough to have eliminated all county property taxes for this year and still have nearly two-thirds left over in unallocated reserves when compared with what it charged taxpayers in 2023.

The numbers are contained in the county’s annual financial report to the State Comptroller, filed with the Board of Legislators and obtained by Allegany Hope Community News through a Freedom of Information Law (FOIL) request.

County lawmakers, on the same day it received the report, made a third attempt to have the State Legislature approve continuance of the additional one-and-a-half percent sales tax rate above what is allowed by base legislation.

The request, if signed into law, is expected to add some $9.25 million dollars annually to county coffers for each of the next two years.

Third highest rate in New York State
The county’s sales tax rate of 8.5 percent, which has been in existence for several years, is the third highest general rate in the state, exceeded only by Erie and Oneida counties which are at 8.75 percent.

Allegany also has had the second highest property tax rate in the state, behind only Cortland County, for several years, after being in the top spot.

This month’s Board action, approved by an 11-to-1 vote of the Legislature, with Gary Barnes of Wellsville voting against the extension and Legislators Adam Cyr of Bolivar, Philip Curran of Alfred Station and James Rumfelt of Andover absent.

The latest action of the Board follows State Legislature leadership refusing to approve a three-year extension of sales tax rates above the baseline for several counties, including Allegany, amending proposed legislation to two years. The county then made a mistake in detailing bill numbers in a second resolution, requiring the third, most recent action.

County action not unanimous
Legislator Barnes also had voted against previous actions, saying he felt the county should be weaning itself off the higher sales tax rate. Rumfelt also had voted “no” previously, telling Allegany Hope Community News that residents of his district had complained about the sales tax rate when he was running for office.

Legislator Dwight (Mike) Healy of Belmont, in contrast, had maintained that there only are two places to obtain significant revenue for county operations, one being the sale tax and the second the property tax. He said businesses are more interested in the property tax rate than the sales tax since they pay little of it.

State Senator George Borrello is the sponsor of the authorizing legislation in that chamber, where it was on the third reading last week. Assemblyman Joseph Giglio is the sponsor in the Assembly where it still is in the Ways and Means Committee. Gov. Kathy Hochul had been reported earlier as proposing to make the higher rates permanent.

Surplus jumps $16 million
The county’s financial report for the 2022 calendar year showed the county surplus jumping from $32.8 million to $48.8 million, an increase of $16 million or a nearly 49 percent increase over the prior year.

This compares with the property tax levy for the entire county of only $29.7 million for this year, resulting in the county’s ability to have eliminated all property taxes for county purposes in 2023 and still having some $19.1 million left over, more than 64 percent of this year’s property tax levy.

The unallocated fund balance, or surplus, doesn’t include $7.5 million which the county board moved to an economic development fund the previous year, with no stated plans for expenditures, or nearly nine million dollars in federal American Rescue Plan Act (ARPA) pandemic funds, both of which could be used to help reduce the property or sales tax.

Surplus equals entire year’s property tax levy
The $7.5 million move came after Allegany Hope, the umbrella for the Allegany Hope Community News project, pointed out on multiple occasions that the county’s previous surplus was equaling a full year’s property tax levy for the entire county.

School districts, by law, are only able to retain a four percent unappropriated fund balance, while other local government entities, such as the county, are held to undefined “reasonable” surpluses.

General sales tax revenues for last year were $28.7 million, over $2 million more than the $26.6 million for the year before. The major increase occurred despite the county declaring a three-month holiday on local sales tax collections on gasoline above $3 per gallon, which would have resulted in an even greater excess.

For this year, the county has budgeted only $25.5 million in anticipated sales tax revenue, some $3.2 million less than was received in 2022.

Sales tax collections to date, as reported for April, are nearly a third of a million dollars over last year, or a 3.26 percent increase.

Revenues from that source in March and April, however, were seen as slowing, being less than the previous year, although legislators indicate they are expecting an additional surge for the remainder of 2023 due to the opening of the new Runnings store in Wellsville, which held its grand opening earlier this month.

Additional revenue increases
Other notable increases in revenues last year included $1.6 million in real property tax receipts over the prior year; $852,485 from the sale of tax-acquired properties and associated interest; $318,286 in investments interest, reaching $515,118; $1.4 million from the county’s share of the state-Seneca Nation revenues fund; and $4.9 million in increased federal aid, which was offset by $1.6 million less in state aid.

The county showed $3.7 million more in general fund expenses last year, including transfers to other funds, over the preceding 12 months.

The report, subject to independent audit which could result in minor adjustments, does not include data from the Allegany County Industrial Development Agency (IDA) which hadn’t yet submitted its financial report at the time of the county’s filing, according to officials.