Commissioners took steps Thursday to raise the sales tax rate.
Commissioners voted 3-0 to enact legislation that would increase the county’s sales tax rate by half a percent for a one-year period, beginning as soon as Oct. 1. This would bump the existing 6.5 percent rate to 7 percent.
The tentative increase would generate an extra $7 million in 12 months. These funds would only be used to upgrade crumbling infrastructure and rundown facilities at the county’s common pleas courthouse, the jail, the nursing home and other public venues.
For years, there has been no extra money in the commissioner’s $26 million annual operating budget to pay for these pressing and pricey projects.
Before any increase occurs, commissioners must host at least two public sessions to provide community members an opportunity to voice their opinions. Times and dates haven’t been set yet.
Erie County administrator Pete Daniel, who reports directly to commissioners, first suggested the hike.
“This is something we need to address,” Daniel said. “Our options are kind of limited. There is the sales tax (possibility) out there. We have the capabilities to (increase it) one-half percent.”
Commissioners Tom Ferrell, Bill Monaghan and Pat Shenigo all voted in support of Daniel’s proposal.
“If we don’t perform proper maintenance on the taxpayers’ facilities now, it will cost double, maybe even triple, later on,” Shenigo said.
The proposed increase would also pay off more than $3 million in existing debt on county-owned buildings.
“Paying off this debt early will eliminate more than $700,000 a year in debt payments,” Shenigo said. “This new revenue in the general fund will allow us to pay for unexpected costs, such as murder trials.”
Almost every time a shopper purchases a product in Erie County today, merchants and retailers apply a 6.5 percent sales tax on qualifying products. The state collects 5.5 percent, and the county keeps the remaining 1 percent.
At 1 percent, officials budgeted to receive about $14 million in 2013, the largest sum from sales tax ever produced in Erie County.
At 1.5 percent, commissioners stand to receive an extra $7 million, for a total of $21 million during a 12-month period, based on the county’s financial forecast.
“This is a one-year deal, and this is something to fix up our infrastructure,” Monaghan said. “This is not going for wages. This is not for fluff and other stuff. This is for things that we need to fix up.”
Commissioners opted to pursue raising the rate as an “emergency,” rather than asking county residents to vote on the tax hike.
Some critics would contend commissioners are irrationally raising the sales tax rate.
A November 2012 Register story quoted commissioners as saying it’s “unlikely” the percentage would increase.
“Things have changed and are different today than when they were in November,” Shenigo said. “We recently learned the stone veneer on the courthouse is literally falling off the building and must be repaired immediately, which could cost up to $500,000.”
Commissioners combat the critics by pointing to their fiscal responsibility over the past five years, including:
•Reducing the county’s total debt from a high of $116 million in 2008 to $98 million entering 2013.
•Trimming the everyday operating budget’s expenses from $30 million in 2008 to $25 million in 2012. Elected officials and unions worked together to limit spending.
•Preventing the operating budget from creating annual deficits. A year-end shortfall hasn’t occurred since 2008, when expenses exceeded income levels by $2.6 million.
Recent cost-cutting measures include consolidating positions after some employees either left or retired. With officials choosing not to replace these jobs, the move saved taxpayers $266,000 in 2013 and beyond, based on these employees’ former and current incomes.
While some customers might gripe about the higher sale tax rate, some people may be willing to accept a temporary tax bump to reinvigorate the local economy, Monaghan said.
“You are going to provide a lot of jobs for people in Erie County with all that work we have to do,” Monaghan said. “It’s kind of like a stimulus package.”
Selling the wish list