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Counties squeezed by lower gas prices, taxes

Cheap gas prices are making consumers happy at the pump, but not everyone is benefiting from the lower prices.

New York’s counties, which impose a sales tax on gasoline, have lost over $200 million in revenues.

The state also charges a gasoline tax, but it’s a uniform rate of 8 cents per gallon. Counties charge a 4 percent sales tax on the price of gas. Stephen Aquario of the New York State Association of Counties says they see less revenue when the price plunges from $4 a gallon to $2 a gallon, which is the average rate right now.

“That’s a good thing for consumers, but it’s a scary thing for local governments,” Aquario said.

He says it’s another hit for the local governments, which are also seeing lower sales tax collections in general, according to a recent report by the state comptroller.  Reasons include people spending less overall and using their money instead to save or pay off debts and a shift to a service economy and Internet sales.

Aquario says much of New York’s tax structure is based on the old economy, and has not kept up with modern trends. For instance, a growing number of households no longer have land lines, but rely on their cellphones instead. Landlines are charged a fee that helps pay for 911 services. Cellphones do not include that charge.

“Without that surcharge, we need to rely on the property tax,” Aquario said.

But the state has a property tax cap, enacted in 2011, that will limit tax levies to near zero growth this year. Aquario calls that a “double whammy” and says that likely won’t even cover increased costs for health insurance and workers’ compensation payments.

Assembly Democrats want to reset the tax cap to a steady growth rate of 2 percent per year. Senate Republicans are discussing the issue, but Gov. Andrew Cuomo remains opposed. Cuomo points out that a supermajority of 60 percent of elected county legislators can override the cap, if they want to.

“Politically, they don’t want to override (the tax cap),” Cuomo said.

Aquario says his group is not asking for the power to impose higher taxes, though.

In New York, counties run many programs that are maintained by state government in other states. The counties are asking lawmakers to take over some of those services. Aquario says the state, for instance, could take back the management of legal services for the poor, which the state regulates, but counties finance and operate.

“What we’re asking for is simply for the state to pay more for its programs and services,” Aquario said.

He says when the state took over the growth of Medicaid costs from counties in 2005, it reorganized the program and made it more efficient, saving money.

Capitol Bureau Chief for New York State Public Radio.
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