October 22, 2021

Legislators, city officials to talk tax-collection fee

Cortland County legislators who represent the city of Cortland are hoping to hold a meeting soon with city officials on what to do about the 1.5% tax collection fee the city is charging the county.

“We haven’t meet yet because we had to get our budget done,” Legislator Ron VanDee (D-Cortland) said Friday. He also noted the city passed its budget so now everyone can focus on discussing the fee.

The city of Cortland imposed a 1.5 % processing fee on the county earlier this year for collecting county property taxes and took that fee off the city’s share of the levy — leaving the county at a loss. In return, the county began looking to bill city taxpayers to cover that fee.

The proposal to put the collection fee on the tax bill comes as the county is short around $123,000 in property taxes for this year from the city after the city implemented and told the county about the fee too late for the tax office to add it to this year’s bills.

Calculations for tax bills can be done now, as the county’s budget has been approved and the levy determined. Karen Spafford, the director of county Real Property Tax Services, then calculates the net amount each municipality must pay.

To make up the 2019 loss, the county may recover the $123,000 by adding it to the city’s share of the levy for 2020, raising the property tax bills for city taxpayers. Further, the 1.5% fee — if passed — would show up as a separate line on the city’s property tax bills for the 2020 budget and future years.

City Mayor Brian Tobin said he’s open to having a conversation, but said so far his perspective of the issue has been lost on the legislature.

“It’s frustrating that the county is tone deaf and that they’re treating us more harshly,” he said.

He said the argument that other municipalities aren’t charging the county is not valid because the city has to handle an increased workload compared to other municipalities.

The city, Tobin said, also fronts money to the county and school district for taxes that have not been paid yet, which is an additional burden on the city budget and ultimately the taxpayers. He said if a village or town resident doesn’t pay a property tax bill, the towns and villages don’t pay the county out of their own budgets. He also said that the county handles the process of seizing and selling a property in towns and villages where the owner failed to pay the taxes. The city handles that process on its own, Tobin said.

Tobin said the city’s decision to charge a 1.5% collection fee was “as a result of the redistribution of sales tax moneys.”

These changes come after the county entered a 10-year sales tax agreement from Jan. 1 to Dec. 21, 2028. The county takes $1.5 million off the top each year in sales tax revenue, keeps 54% of the remainder and sends 17.75% to the city and 28.25% to the other municipalities.

If the city and county continue the agreement for the final five years, the county would continue to take $1.5 million off the top. The county then would get 55% of the remaining sales tax distribution, the city 17.38% and towns and villages 27.62%.

In the previous agreement, the county kept $300,000 a year off the top for its emergency communication system, took 53.5% of the sales tax distribution, when the city got 17.62% and the towns and villages got 28.89%.

Tobin reiterated that the city would be open to “investigating central billing and collecting department for tax collection.” VanDee said the hope is to have everything figured out before the beginning of the new year.