County Cuts Sales Tax Aid To Villages

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Villages throughout Nassau County were blindsided by the news last week that they would not be receiving their annual share of $1.25 million from sales tax revenues normally shared by the county because those funds were eliminated from the budget by County Executive Ed Mangano’s office when the Nassau County Interim Finance Authority (NIFA) mandated $36 million in budget cuts after the 2017-18 county budget was submitted for its review last year.

Village clerks became aware of the financial shortfall when they contacted the county treasurer’s office to process the vouchers they are required to submit each year to obtain the funds that are distributed by the county based on the population in each village. And village trustees learned of the shortfall one month after they had approved budgets, assuming the funds would be received from the county.

After confirming with Nassau County because the Village of Garden City was not notified of this change, Village Treasurer Irene Woo noted this is the first time since 2007 villages will not be receiving sales tax aid.

“The village was not notified of this change. However, the County Sales Tax revenue in the 2017-18 budget is $62,000, which represents 0.1 percent of our total budget of $60 million,” Woo said. “This loss of revenue can be offset by additional State Aid of $73,000 that was not included in the adopted budget due to the timing of when the notification was made to the village.”

Neighboring municipalities were equally caught off guard by the abrupt timing of this county announcement.

“We are shocked to learn—after our village budget was adopted—that Nassau County has eliminated the villages’ share of sales tax revenue, while leaving the towns and cities their shares. It leaves us with a large hole in our budget that our village taxpayers will need to absorb somehow. If the county had told us about this when it passed its own budget last year, at least we could have planned for this loss,” Mineola Mayor Scott Strauss said in a statement. “I understand the county’s need to balance its troubled budget, but it shouldn’t do so on the backs of village taxpayers.”

For the Village of Mineola, the county budget cut translates to a loss of $52,000 in revenues. Mineola’s village board approved a $19.6 million budget last month with no tax increase to its residents for the second straight year.

Village officials said they would simply have to craft spending cuts on the fly throughout the 2017-18 fiscal year.

“Without any warning, it is very upsetting because it’s after the fact, after the budget has been adopted,” New Hyde Park Mayor Lawrence Montreuil said. “We’ll just have to manage the budget with that much less revenue. We’ll make spending adjustments where we need to keep things balanced. It’s just one more challenge for us.”

The Village of New Hyde Park would have received $26,000 from the county in sales tax aid, which Montreuil said represented approximately one-half of one percent of its $6.19 million budget for the 2017-18 fiscal year.

But Montreuil noted that the village board faced the stricture of a 1.59 percent state cap on its allowable year-to-year tax levy increase—as did all other village boards—in crafting its budget.

Brian Nevin, a spokesman for Mangano, said the sales tax aid for villages was in the original budget formulated by the county executive. But he said the county legislature’s amendments caused certain revenues to be considered at risk by NIFA, which subsequently mandated cuts.

Nevin said if the revenues are restored, the sales tax aid to the villages may also be restored to the county budget.

Eric Naughton, deputy county executive for finance, enumerated what NIFA required and indicated it was the village officials’ responsibility to keep track of what funds would be available to them.

“NIFA mandated $36 million in cuts and this savings was recommended by the Office of Management and Budget. Any finance professional knows that it is incumbent on the receiver of funds, whether they are a not-for-profit or a municipality, to verify that they will receive funding in the future,” Naughton said.

The 2017-18 county budget was ultimately reduced from $2,983,433,140 to $2,970,979,140.

A NIFA spokesman declined to comment on the budget cuts.

County Legislator Richard Nicolello (R-New Hyde Park), deputy presiding officer in the legislature, said the legislators had decided to cut the fee attached to moving traffic violations from $100 to $50, which he said was one factor that prompted NIFA to question anticipated revenues in the budget and require the county administration to make cuts.
He said he is hopeful that the sales tax aid may be restored.

“To satisfy NIFA this is a decision the administration made. We consider this aid to the villages important. We would like to restore it,” Nicolello said.

In a statement released last week, county legislative minority leader Kevan Abrahams (D-Hempstead) said, “Instead of solving the Mangano manufactured fiscal crisis here in Nassau by tightening his own belt, he chose to pass the burden to village government instead by cutting the shared sales tax. What’s even worse was there was no communication from the administration to contact the villages leaving them in the dark and unable to prepare for their budgets that were already put in place for 2017. Now, the continued Mangano Republican mismanagement isn’t just affecting Nassau, but every village in our county.”

—Additional reporting by Dave Gil de Rubio

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