Gov. Andrew Cuomo announced Friday the restoration of Aid and Incentives to Municipalities (AIM) program by using revenue from a proposed internet sales tax.
The governor proposal to cut nearly $60 million in aid to towns and villages in the 2019-2020 Executive Budget received significant pushback from officials over the past month who say the funding source is essential for keeping taxes at bay.
Several Twin County village and town boards passed resolutions to oppose the governor’s initial plan, which kept AIM funds stagnant for cities outside of New York City in 2020 and 2021, but reduced the funding for towns and villages from about $68 million in 2019 to $9 million in 2020.
The plan was to adjust allocations for 846 towns and 480 villages that rely on AIM for less than 2 percent of total expenditures.
Local officials said the cut could put a major strain on budgets as they struggle to keep tax increases below the 2-percent tax cap and pay for state mandated programs.
In Cuomo’s revised plan, counties will pay for AIM using new revenue from a proposed internet sales tax. The governor’s office is expecting a windfall of about $390 million in additional revenue for local governments across the state by eliminating the internet sales tax advantage.
“The original proposal only impacted localities receiving a relatively small amount of money, but I have been contacted by mayors and local officials who say in these tough times, it would still be a challenge for them,” Cuomo said in a statement. “That is why we are revising the executive budget to use internet sales tax revenue to make these impacted localities whole.”
The internet sales tax requirement will be implemented in June. About $59 million in AIM funding is expected to be restored with the revision, according to the statement from the governor’s office.
Several Republican lawmakers do not think the new proposal is a reliable alternative.
The governor’s latest proposal penalizes villages like Catskill, which does not receive county sales tax revenue, Village President Vincent Seeley said Wednesday.
“This hurts Greene County towns and villages more because Greene County does not share any sales tax with us — resulting in a potential de-incentive to grow our business base,” Seeley said. “The AIM funding will still be lost and that will go to the county.”
Seeley called the governor’s plan for an internet sales tax a double-edged sword.
“On the one hand, it delivers a fair playing field to local businesses that have to collect the sales tax... on the other hand, this seems almost impossible to administer and may force internet shoppers to outside New York companies,” Seeley said. “It also gets into some serious questions regarding trade laws and if they apply to non- brick-and-mortar businesses.”
Kinderhook was one of several municipalities that passed resolutions opposing the governor’s proposal in January. Kinderhook Town Supervisor Patrick Grattan was skeptical of Cuomo’s latest plan.
The governor’s revision to take county internet sales tax means towns and villages will rely on a pot of money that could fluctuate with the economy, Grattan said.
“Before, we had a reliable flow of funding and now you are up to something that is driven by the market,” he added. “That is what I see the weakness of it. How are we going to be sure these companies are going to be collecting sales tax and paying it over? ... The strength of the AIM is that it was dependable and would always be there.”
State Sen. George Amedore Jr., R-46, sent a letter in January to the leaders of the state Assembly and Senate to oppose a proposal in the 2019-2020 Executive Budget to save money by cutting $59.2 million from the Aid and Incentives to Municipalities program, specifically for towns and villages.
“It’s ridiculous that the governor wants to restore cuts in AIM funding at the expense of the counties’ portion of his internet sales tax proposal,” Amedore said. “I expect a full restoration of AIM on the state’s side — not by shifting the cost and forcing the counties to pay for the state’s unfunded mandates. Any new potential revenue from an internet sales tax should go toward reducing the property tax burden, but instead the governor is playing a shell game and ultimately, taxpayers will pay the price.”
“This represents a major hit to our area,” said Sen. Daphne Jordan R-43. “Instead of cutting AIM funding or hiking taxes, the governor should end failing programs like START-UP NY that has cost taxpayers millions and hasn’t delivered promised jobs.”
START-UP NY offers new and expanding businesses the opportunity to operate tax-free for 10 years on or near eligible state university or college campuses, according to the Empire State Development Corporation.
Assemblyman Chris Tague, R-102, said Cuomo’s proposal is ridiculous, adding the state does not need a new tax to cover AIM funding.
“These new taxes are just an excuse for Gov. Cuomo to take more of our tax dollars and limit online business opportunities in the state — end of story,” Tague said Wednesday. “In a budget of $175 billion, we don’t need to create new taxes to support our local towns and municipalities. Gov. Cuomo is just taking advantage of the situation to grow the state’s coffers at the expense of hard-working upstate business people and taxpayers.”
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