By Rick Miller
The Great Valley Town Board appears to have found a solution to the 20 percent increases town residents recently found in their tax bills.
At a meeting attended by more than 40 residents Monday night, Supervisor Daniel Brown said he, Town Attorney Peter J. Sorgi and town board members had worked to develop options to correct the error, which occurred when the budget miscalculated the amount of sales tax revenue that would be available to reduce town taxes.
“We screwed up bad,” Brown said. “We underestimated the sales tax revenue. It won’t happen again.”
While town taxes decreased slightly, residents’ county tax bills rose sharply. The increase on a $100,000 property was up to $300.
The increase in county taxes was supposed to mirror a decrease in the town tax levy as the town chose to apply its share of county sales taxes to the town taxes instead of the county tax levy. Twenty-nine other towns do it that way.
The estimate Cattaraugus County officials used in the 2018 county budget would bring the town $495,000 in sales tax revenues. Great Valley officials approved a conservative estimate of $75,000. It was the first year they had decided to take the sales tax in cash. The intent was to decrease town taxes while allowing county taxes to increase by a similar amount.
More than 50 people attended the town board’s organizational meeting Jan. 8 to question what was behind the big jump in tax bills.
On Monday night, Sorgi described a local initiative the town board could approve next month and quickly refund the excess taxes. A provision in New York Town Law, Section 112, provides the town board an opportunity to refund an unexpected surplus.
Sorgi said the most direct way is to figure out how much each of the 1,500 parcels in the town faced with a higher county tax bill and distribute in in a matter of weeks or a month.
Board member Gerald Musall said only about 83 percent of the excess tax would be covered because $75,000, or 17 percent, had already been set aside to reduce the town tax levy.
“That’s where we are focusing our attention,” Sorgi said, referring to a formula that could be applied for the fair distribution of the sales tax. “We’re still looking at the details.”
While state Sen. Catharine Young, R-Olean, and Assemblyman Joseph Giglio, R-Gowanda, had offered to sponsor legislation to allow the town to make the tax rebates, it would probably take until June to approve. If it were approved, the governor would then need to sign it.
“This is the cleanest, simplest and quickest way to take care of the situation,” Sorgi said. “We believe this will solve the problem.”
One woman said that as someone on a fixed budget, she will be unable to pay her taxes on time. Sorgi said the town board could not pay late fees and interest. The individual will have to pay their taxes before getting the rebate, he added.
One man asked about homeowners with escrow payments. Sorgi replied that the town will provide letters about the tax mistake to financial institutions. Some people’s escrow may be bumped up in the meantime and it could go on for a year or two despite the letter.
Brown said the town had been advised for years to take its share of the town’s sales tax in cash to reduce its tax rate or for any projects or purchases.
“We hit a hell of a pothole, using numbers we thought were safe,” he said.
Sorgi added, “We’re trying to find a creative way to fix this thing in the least painful fashion.”
Brown again apologized to the residents in the audience.
“We were trying to do the right thing,” he said.
Sorgi said the sales tax revenue the town didn’t apply to the town tax levy amounted to “an unexpected surplus.”
“The law was enacted for an unexpected situation,” he added.
When the town board meets Feb. 13, it is expected to vote on a resolution to rebate the excess surplus.
“I like the solution,” one man in the audience said.