By Joyce Kryszak
Buffalo, NY – A half cent increase in the sales tax for Erie County is on hold -- at least temporarily. Some worry that could mean a massive property tax increase after-all. But one financial expert says there really isn't any difference for property owners.
County lawmakers, even some who voted no for the sales tax increase, say if you have to tax, it's the better way to go. The Erie County Fiscal Stability Authority agreed. The Control Board even gave the Legislature a little wiggle room, if not some political cover, so they could pass the increase after Election day. The message? Property tax bad. Sales tax... not so bad. Republican Chuck Swanick voted for the sales tax.
"Property tax has always been the most negative tax I've ever seen," said Swanick. "I just think that anytime you have to do some taxes, which is a terrible thing, but when you absolutely have to do it, you want to look at a broad base that impacts everybody."
Republican lawmaker Barry Weinstein believes that too, even though he voted against the increase.
"The dollar amount is the same. The question is where does it come from, whose pocket does it come out of," said Weinstein. "With the sales tax it comes in small amounts from a lot of people's pockets, some of whom don't pay property tax."
But one financial expert says there is little difference in how the tax is distributed. Anthony Ogorek is principal of Ogorek Wealth Management. He says everyone -- including property owners are paying more.
"It really doesn't matter if we are rearranging the deck chairs on the deck of the Titanic," said Ogorek. "And that's what the county legislature has done here. It doesn't matter what flavor these tax increases are being served to the public in."
But lawmakers adamantly pursued and ultimately approved a sales tax, fees and property tax mix. About $63 million is anticipated from additional sales tax revenue. Another $6 million is estimated from a host of new fees. And the remaining roughly $20 million would come from property taxes. The formula was presented as superior for property owners, who otherwise would have absorbed the entire hit on the property tax side. But Ogorek says that notion is mathematically flawed.
"It's intellectually dishonest. I think it's disingenuous to the tenth power," said Ogorek.
He says there are a many problems with the assumption. First, he says not all property owners would have been equally affected. Ogorek points to differences in town re-evaluations, subsidies for properties, such as condos, and tax abatements. Worst case, the property tax hike is estimated at around $25 a month for a house assessed at $100,000. Although it's difficult to generalize buying habits, Ogorek says it's conceivable that sales tax and fee increases could actually hit property owners harder. He says the they tend to be able to buy more.
"There saying the point is it's being unfair to make the property tax payers bear the full burden of this, when it could be being spread among other people," said Ogorek. "Well, the other people who are not property tax owners are probably lower income people."
For example, lower income people are less apt to be able to afford a new $40,000 car. The increased sales tax on that purchase alone would be about $200, according to Ogorek. Then, there are those new and higher fees. New motor vehicle registration fees will also more likely impact the more affluent in the community, who tend to own multiple vehicles. They also will be more likely than the poor to be paying those new boat launch fees, camping fees, and higher golf fees. No pun intended, Democratic Majority Leader Lynn Marinelli says the fees are now more on par -- and more fair.
"People got away with a great bargain for a long time, now they are at least paying for the service in those way," said Marinelli. "They can interpret that as they're paying for a tax. But there's something to be said for user fees -- those who use it pay for it, not everybody else subsidizing it."
There certainly aren't any subsidies in the new fees for business owners. Small businesses, ranging from food service to beauty parlors, will pay about double for a host of inspection, permits and licensing fees. Marinelli acknowledges businesses are hit from many angles.
"That is what we also worked to blunt from the original four-year plan too, especially with the recognition that if you're going to have to raise sales tax and property tax you don't want to hit those proprietors so hard in all ways," said Marinelli. "Truly we're sensitive to that."
But financial expert Anthony Ogorek doesn't think so. He says it may not be showing up all in one property tax bill. But he says the so-called favorable sales tax mix is still costing property owners - and the county big time.
"When you're turning around getting nipped for gas being higher, your cell bill being higher, your sales tax when you go out, if you're tipping people...you look at the whole thing," said Ogorek. "And that's not something a commentator is going to make a judgement on, that not something a news reporter is going to make a judgement on. This is a judgement that's going to be made by average people who are deciding if their best interests are served by a bloated bureaucracy that is sucking the life out of Erie County, or if they should go somewhere else where the politicians get it."
Most local lawmakers and officials still believe the sales tax mix is better than a sole property tax hike. But with the final sales tax votes stalled as they wait for Albany, it is possible that property taxes could become the default end to the debate.