NIAGARA COUNTY: County banking on sales tax growth

Local News

July 31, 2007

Comptroller’s report names Niagara

By Jill Terreri/terrerij@gnnewspaper.com The Niagara Gazette Tue Jul 31, 2007, 06:24 PM EDT

Low growth trends in sales tax revenue make a plan for paying for Medicaid more attractive for Niagara County than it does for other counties, according to the state comptroller.

In a statewide report released Tuesday, state Comptroller Thomas DiNapoli listed Niagara as one of three counties that could benefit from a program that allows the state to “intercept” local sales tax revenue to pay for the health insurance program for low-income and disabled people.

In exchange, the county wouldn’t have to pay Medicaid costs out of its property tax revenues.

In legislation that was passed in 2005, the state gave counties a deadline of Sept. 30, 2007, to choose one of two options: Take advantage of a cap on Medicaid costs and pay for those costs however counties want to, or allow the state to intercept a portion of local sales tax revenue to pay for Medicaid based on a formula derived in Albany.

The legislation does not allow counties to change their minds after a decision is made by the Sept. 30 deadline, a rule the comptroller said was not in the counties’ best interests.

“You can’t buy into a system that locks you in,” said County Manager Gregory Lewis.

Niagara County officials are hoping for greater growth in sales tax revenues than Albany is expecting, and plan to keep the cap.

If the county changed its mind, and decided to allow the state to intercept its sales tax revenues, approval by the Legislature would be needed.

Niagara County raises $50 million from sales tax, including profits from an “extra” one-percent that solely funds Medicaid. The Medicaid bill this year will be $39.6 million, which will be funded by revenues from sales and property taxes.

DiNapoli’s report recommends that most counties should keep the cap and not “swap” future sales tax revenues, but in looking at Niagara County’s low growth trend for sales tax, allowing the state to take a portion of those profits for Medicaid could benefit the county.

He warns, however, that a slight increase in sales tax revenues could negatively impact Niagara’s potential benefit.

While slow growth is expected in the short-term, County Treasurer David Broderick said the county is expecting economic development and doesn’t want to gamble away that growth by allowing the state to take local sales tax revenue as it sees fit.

“I think we’re going to have better growth in the future,” Broderick said.

Since the cap allows Medicaid costs for counties to grow just 3 percent every year, Niagara County can budget how much its costs will be, unlike in other years, before the 2005 legislation was enacted, when costs would jump 10 percent or more every year and the county could never tell how much its Medicaid bill would be.

Along with Niagara, the comptroller’s analysis found that Monroe and Wayne counties have low sales tax growth, which could make the sales tax “swap” option more cost-effective.

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