Ogdensburg will pre-empt sales tax, but remains open to 'mutually beneficial' negotiations with county
BY JIMMY LAWTON
North Country This Week
OGDENSBURG — Although the city has declared it will pre-empt the county on sales tax collections within the city, City Manager Stephen Jellie says he is still open to negotiations on sales tax if a 'mutually beneficial' deal can be struck.
In a letter to the county administrator Jellie said that the city has wanted a fair negotiation from the start but said continued push back from the county legislature forced the city to look at pre-emption.“Since taking office in January 2020, Mayor Jeffrey M. Skelly has worked tirelessly to negotiate a fair and lucrative sales tax sharing agreement with the County. Mayor Skelly takes his responsibility for negotiating this agreement seriously as it does impact the revenue ultimately available to be shared with the towns and villages in the County. Several members of the County Legislature take issue with this, and some refused to work with the City because of this and that is truly unfortunate,” Jellie said.
“It is also unfortunate that the County Legislature disapproved each and every offer presented to them by the joint city/county committee charged with working on this matter, to include a last ditch effort to approve an additional one year extension that would have given the city and county additional time to negotiate a long term arrangement. For the city’s part, we cannot seriously entertain the acceptance of the formula proposed by Legislator Kevin Acres that would have Ogdensburg’s current sales tax revenue cut by 50% (which equates to a dollar reduction of $2.1M) which would leave the city with $1.9M versus the $4.0M collected in 2020. For reference, in the last year the City collected its own sales tax (1999), it collected $1.8M,” he said.
Meanwhile St. Lawrence County Attorney Stephen Button says the city’s plan to preempt the county on sales tax will likely bring in less money to the city than previously thought.
Button says he spoke with the State Department of Taxation and Finance and was told that even if the city preempts the county on sales tax collection, the city wouldn’t be able to begin collecting the revenues until March of 2022.
He said the county has been operating on a distribution agreement with the city for sales tax which has been extended until Nov. 30. The agreement allowed the city to receive a portion of the county’s 3 percent as well as a portion of the additional 1 percent sales tax the county was approved to collect.
The city can preempt the county on the 3 percent, but requires special approval to preempt the additional 1 percent and that approval failed to clear the Assembly.
“As a result of the state’s lack of passage of the authorization to impose an additional 1 percent of sales tax collections within city confines, the county will continue to collect the full 1 percent,” said Button.
Essentially 2.5 percent of sales tax collected in the city will go to the county and 1.5 will go to the city assuming they preempt, Button said.
“The department indicated to us that an entity that intends to preempt must provide six months notice and that collection must not occur in the middle of the collection quarter. Assuming the city moves forward and provides formal notice to the county as called for in the agreement. Six months from now would place the request in the middle of a quarter of collection, which would move the first date for the quarter of pre-emption of March 1, 2022,” he stated.
Although the city remains hopeful that the Assembly bill could move forward in a special session and get the governor’s signature, Button says the city would still only receive half of the additional 1 percent, not the full amount.
Even if the legislation is passed by the Assembly and signed it would only permit the city to claim .5 percent of the entire tax bringing the city’s total share of the sales tax collected within the confines of the city to 2% not 2.5% as has been previously believed, Button noted.
Button also said that there remains some confusion as to what would constitute as sales tax collected within the city. He said the Department of Finance said it is not determined by zip code or retail address but is based on a tax code that is issued to retailers. It’s unclear what that would mean for businesses in the city, though it’s possible that the code is generated based on the city’s physical boundaries.
Although the city does intend to pre-empt unless a deal is struck, Jellie says the city is still open to a fair deal.
“The City of Ogdensburg desires to reduce the tax burden on all the taxpayers and residents, and we sincerely hope St. Lawrence County shares the same desire of making life a little easier, if not a lot easier, by reducing the heavy local tax burden levied from city, school and county government. We strongly believe that consolidating services, eliminating duplication and embracing technology will result in less government. The City of Ogdensburg strongly urges the St. Lawrence County Legislature to consider returning to the negotiating table with individuals fully empowered and supported by the full board, with the intent of doing what is right to secure a mutually beneficial long term agreement for this topic and the many other cost saving initiatives presented by the city in recent weeks. I look forward to your acknowledgement of this correspondence and a date in which the County would like to resume talks, perhaps this week,” he said in his letter to the county.