Published: July 15, 2008 11:49 pm      

ERIE COUNTY: Change to tax revenue could hurt city

The City of Tonawanda stands to lose $1 million of revenue per year if a proposal being touted by a local member of the Erie County Legislature gains approval from state leaders.

Appearing earlier this week before the county Legislature’s Finance and Management Committee, Tonawanda Mayor Ron Pilozzi argued that the county’s three cities would be drastically impacted by a plan authored by Legislator Michelle Iannello, D-Kenmore, to redistribute the way sales tax revenue is shared with Tonawanda, Buffalo and Lackawanna.

Based on an agreement that has been in place since 1977, the county’s three cities receive 10.008 percent of the local 3 percent share of Erie’s sales tax revenue. Were that to be abandoned, Tonawanda would lose $1.1 million, or 5.7 percent of its annual operating budget, Pilozzi told the committee.

“Tonawanda would be either forced to cut vital public services or raise city taxes by approximately 13 percent, placing additional stress on its state 2 percent constitutional taxing limit,” he added.

The resolution, which Iannello’s colleagues passed last month, asks Gov. David Paterson and the State Legislature to re-examine the formula for determining state aid for municipalities to make it more fair to New York’s 279 villages, including Kenmore.

“Demographically and geographically, they are very similar,” Iannello said of the City of Tonawanda and Kenmore, whose populations are 14,931 and 15,123, respectively, according to the latest U.S. Census Bureau Population Estimate. “The current formula gave the City of Tonawanda $2.6 million in 2007-2008 and the Village of Kenmore $651,000,” Iannello said.

Her resolution calls on state officials to revise the revenue sharing criteria to “focus less on what a municipality is called, but (more) on the services it provides, the needs of the residents and the economic factors surrounding the municipality.”

Pilozzi argued, however, that cities need a larger share of the sales tax revenue to manage their unique challenges, which he said include providing services to an aging population while maintaining older infrastructure and housing stock. The city’s sewer system, for example, is a century old.

The mayor also said that Iannello and others fail to recognize the fact that city, town and village residents all pay the same county taxes, but Erie County’s three cities don’t receive the same road maintenance services and sheriff’s patrols that its towns and villages get. Moreover, cities can’t expand their tax bases the way towns and villages can, Pilozzi said.

Contact reporter David J. Hill at 693-1000, ext. 115.