September 20, 2000

County Votes to Drop Part of Local Sales Tax

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Against the urging of Ithaca Mayor Alan Cohen ’81 and a resolution by the Ithaca Common Council, the Tompkins County Board of Representatives voted yesterday (9-6) to repeal the four percent sales tax levied by the county on clothing and footwear valued under $110.

Taxes will be slashed beginning March 1, 2002 to give municipalities time to adjust their budgets and taxing rates to compensate for the anticipated loss of tax revenues, explained board chairperson Barbara Mink.

“The [Tompkins County] Chamber of Commerce, along with several business people, came to the meeting, saying that a lot of shoppers went to neighboring counties because of the sales tax differential. The tax cut was proposed in order to lower the playing field,” Mink said.

City officials explained, however, that the March 2002 date would still not give the city enough time. Tompkins County representative Barbara Blanchard put forth an ammendment to the tax cut plan to have it take effect a year later, in March 2003. The ammendment was later rejected in a 10 to 5 vote.

Blanchard and other city officials wanted more time to study the effects of the four percent sales tax in Tompkins County.

“We have estimates, but we really don’t have data about what we’re losing and how much we’re bleeding because of the tax,” explained Joan Spielhotz, Common Council member for the 4th ward, which comprises parts of Collegetown.

City representatives claim that many Tompkins County residents leave the area to find shops with more selection and not to avoid paying the sales tax.

“People leave [the county to shop] because they can do more comparison shopping and can visit the bigger department stores that simply don’t exist in Tompkins County,” explained Susan Blumenthal ’78, D-3rd Ward.

Spielhotz pointed out that Onandaga County, where Syracuse’s Carousel Mall is located, has not repealed its four percent local sales tax, yet it remains a popular destination for Ithaca shoppers.

The nearby counties that have pressured Tompkins County by dropping their local portion of the sales tax mostly abut Pennsylvania, where no sales tax exists, Blumenthal explained.

Plans are underway in Ithaca to partly remedy the lack of consumer choices. The Southwest Park area of Ithaca stands as the designated site for a shopping center which will accomodate almost 200,000 square feet of big-box retail stores and restaurants. The city’s west end area is also slated for construction of new retail stores.

Blanchard asked for a delay in the tax cut so that the city could first enjoy some sales tax revenue from the projected Ithaca shopping areas. Blanchard and city officials also wanted to give the county time to study whether or not consumers really took their money elsewhere when faced with a four percent tax.

“We’re a very revenue poor area, and this lost source of income [from sales tax] will really hurt us,” Spielhotz explained.

“[Sales tax] is a major source of revenue for the city. If we lose that, we still have to worry about paying for police, fire and other services our residents expect. Property taxes will have to go up, and landlords will only pass that on to the tenants in the form of higher rent,” Spielhotz added.

Spielhotz and seven other city council members convened in a special meeting last week to unanimously pass a resolution urging the Tompkins County Board of Representatives not to vote on the tax measure. The resolution also stated that, if the board must vote on lifting the sales tax, they should delay the vote’s enactment until 2003. Both items on the resolution were passed over.

Blumenthal offered a possible explanation for why some representatives from areas outside the City of Ithaca were not receptive to the city’s requests. “There’s a real distinction between the different municipalities in how much commercial property each one has. The city relies especially heavily on sales tax to support its services. For other municipalites, a tax cut would not hurt nearly as much.”

Board of Representatives member Michael Lane, D-Dryden, explained that the sales tax cut may not hit Ithaca so hard. According to prior agreements between the county and the City of Ithaca, the city has the right to continue to charge the one and half percent sales tax it normally collects out of the four percent county tax.

Lane had first proposed the tax cut resolution to the county board. Though he felt that Tompkins County was pressured by surrounding counties to cut their sales tax, Lane admits the cuts will hurt. “We hope [the lost tax revenues] won’t hit too hard. The hope is that if county residents can shop for the basics here without sales tax, they’ll stick around to buy other things, too,” Lane explained.

In March 1999, New York State had dropped its four percent share of the sales tax on clothing and footwear valued up to $110. Surrounding counties, including Tioga, Broome, Cortland and Schuyler counties, had dropped their local shares of the sales tax following the state’s announcement.

Archived article by Yoni Levine