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Back Tax Lawsuit - County Statement

Back Tax Lawsuit - County Statement

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Published by David Lombardo
Schenectady County Statement
Schenectady County Statement

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Published by: David Lombardo on May 01, 2013
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12/11/2013

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Statement of County of Schenectady Regarding lawsuit filed against the City of Schenectady for Back Taxes

The Context of the Dispute The County of Schenectady has had, and will continue to have an outstanding relationship with the City of Schenectady. Direct Investment/Revived Downtown/New Jobs. In recent years the County of Schenectady has approved bonds through Metroplex for in excess of $100 million dollars of sales tax money directly invested in the City of Schenectady. This has resulted in a revived, thriving downtown, and an unprecedented growth in the City and throughout the County. Over $830 million dollars in new investment and over 6,400 new jobs have been created countywide since 2004. Intermunicipal Cooperation and New York Sales Tax Agreement

The County of Schenectady and the City of Schenectady recently agreed upon a new sales tax agreement which will bring the City over $15 million dollars in new revenue over its eight (8) year term, assuming the sales tax grows at its historic 2% growth rate. The sales tax agreement also guarantees the County’s $200,000 Hazmat Grant each year and the County’s $125,000 police grant each year, for additional guaranteed funding of $2.6 million.

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Vehicle Maintenance Agreement The County of Schenectady has assisted the City with the vehicle maintenance agreement which has saved the City over $1 million dollars each year since 2005 for a total savings of over $8 million dollars.

Healthcare Advice and Assistance in Labor Negotiations The County has provided the City with healthcare consulting which has resulted in over $2 million dollars in annual savings to the City – over $1 million dollars each year for implementing of Medicare Advantage Plans, and over $1 million dollars each year in the new CSEA Benefit Trust healthcare plan. As part of the sales tax agreement, the County Department of Law negotiates labor contracts for the city and recently negotiated the AFSCME 1037 contract for the City which retired the City’s outmoded PPO plan and which as a whole provides the City with over $600,000.00 in healthcare savings over its term. The Tax Dispute The City has declined to make the County whole for uncollected County taxes in the City. The amount of money at issue is $1,175,219.30. The City has made the County whole in this regard for many, many decades, because it is required to under the law. While the City has declined to make the County whole for 2012, it has not done so in a fashion which is fair to the County because under Municipal Home Rule Law, the City has 2

retained sole and exclusive tax enforcement and tax collection rights and has not given these rights to the County. This is the basic flaw in the City’s charter amendment, which was drafted by the prior Corporation Counsel. The machinery and mechanism for collection and enforcement of County taxes remains solely under the control of the City. In conformance with case law, the County must be granted collection and enforcement powers in connection with its tax levy, which can only be transferred by the City, if the City wishes to discontinue its obligation to make the County whole for unpaid County taxes. This was not done when the City amended its Charter. Simply put, the City must take the bitter with the sweet -- the bitter granting to County equal tax collection status if it wants the sweet – to discontinue making the County whole. The County and City have had several amicable meetings regarding this issue but were unable to reach an agreement. Accordingly, the County, in order to preserve its legal position was required to file this suit. (See County of Dutchess vs. City of Beacon 100 AD 2d 278, 493 N.Y.S. 2d 864; County of Rensselaer vs. City of Troy, 102 AD 2d 976, 477 N.Y.S. 2d 850; County of Nassau vs. City of Long Beach, 274 N.Y. 458, 9 N.E. 2d 50) in support of this proposition. County Attorney, Christopher Gardner has recused himself from this lawsuit, because of his representation of the City in labor negotiations. The County is being represented in this matter by Patrick Saccocio, who has an extensive background in municipal law and litigation.

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