Senate Passes "giambra Penny" Additional 1% Sales Tax For Erie County

William T. Stachowski

February 01, 2005

(ALBANY, NY) Today, the State Senate passed Erie County’s additional 1% sales and use tax bill (S.215-A) in order to maintain stable sales and use tax collections to meet operating costs of County government. This "Giambra Penny" legislation will authorize Erie County to impose an additional 1% sales and use tax in addition the temporary 1% additional sales and use tax the County has annually been authorized to impose since March 1, 1985. This brings Erie County’s sales tax to 9.25%, if also passed by the State Assembly and the Governor enacting this bill into law.

"Erie County is facing serious financial challenges that must not be placed on the backs of Erie County taxpayers," said Senator Dale M. Volker. "Although I am not a proponent of this sales tax increase, the Erie County Legislature has asked for state approval to implement this new 1% increase in its sales and use tax. Without this measure, it would mean property tax increases of 30% -40% and the elimination of over 3,000 employees. This is a one-year 1% temporary increase. It is my hope that the Erie County Executive and the Erie County Legislature takes this opportunity to make the hard decisions and tackle the structural deficiencies that have created this daunting scenario."

Prior to the passage of this new legislation, Erie County had been authorized to impose a sales and compensating use tax at a rate of no more than 3%. In addition, since 1985 Erie County has annually been authorized to impose an additional 1% sales and compensating use tax. Erie County Executive Joel Giambra has, for the past several weeks, been seeking in addition to this taxing authority, the authority to impose a new sales and compensating use tax in an amount 1% higher than the amount currently authorized. The Erie County Legislature has voted in agreement with County Executive Giambra’s extra penny proposal, via a 2/3rd’s Majority Vote on its Home Rule Message for the State Legislature to act on Erie County’s sales tax increase request.

The County of Erie began imposing an additional one percent sales and compensating use tax in 1985. That additional one percent sales tax rate was authorized and imposed to avert a financial crisis for Erie County in that year. Extensions of the additional one percent sales tax rate have been annually authorized and implemented since 1988 in order to preserve and maintain the financial stability of Erie County government. Erie County now directly faces a new financial crisis due to unchecked increases in Erie County's structural deficit and the looming exhaustion of Erie County's reserve fund balances. As a consequence, in order for Erie County to continue to provide full county services, without prompting a horrendous increase in real property tax rates, Erie County has requested that the New York State Legislature enact special taxing legislation authorizing Erie County to impose sales and compensating use taxes at a rate that is one percent above the four percent sales tax rate it is currently authorized to impose.