Highlights from the September 19 meeting of the

Tompkins County Board of Representatives

COUNTY WILL DROP SALES TAX ON CLOTHING AND SHOES

Starting March 1, 2002, Tompkins County shoppers will no longer pay sales tax on purchases of shoes and clothing up to $110. In March 1999, New York State dropped its 4 percent portion of sales tax on these items. Broome, Cortland, Schuyler, and Tioga counties dropped their local taxes on March 1 of this year. Tompkins has an 8 percent sales tax, and will drop its 4 percent share on the designated items. The proceeds from sales tax are divided among the County, City, and towns and villages.

Michael Lane, who authored the resolution, reported that a survey of municipalities showed a majority favor dropping the tax. County Finance Director David Squires estimates the total loss in sales tax revenue will be about $1.17 million in one year. The County’s loss will be about $700,000. At the meeting, Mayor Alan Cohen read a resolution passed by Common Council that opposed the action and asked for a delay until 2003. The City could continue to impose a 1.5 percent sales tax inside the City.

The Board of Representatives vote was 9-6. Voting yes on the tax break were: Charles Evans, Tim Joseph, Michael Koplinka-Loehr, Michael Lane, Barbara Mink, Frank Proto, Thomas Todd, George Totman, and Daniel Winch. Voting no were Barbara Blanchard, Susanne Davis, Dooley Kiefer, Peter Penniman, Nancy Schuler, and Stuart Stein.

COUNTY WILL SELL HALF OF TOBACCO SETTLEMENT FOR $7.9 MILLION

Tompkins County has opted to receive a portion of its tobacco settlement money in a lump sum, estimated at $7.9 million. By a vote of 8-7, the Board of Representatives approved securitization of 50 percent of its anticipated tobacco settlement funds for the next 30 years. Securitization is a means by which counties can sell tax-free municipal bonds backed by future tobacco settlement payments.

The annual payments are the County’s share of the settlement of the lawsuit brought by the state attorneys general and are intended to offset Medicaid costs caused by tobacco use. By agreeing to securitize, the County will give up half of its settlement payments, estimated to range from $1.3 – $2 million annually. The payments are subject to the ups and downs of the domestic cigarette market, inflation, the effects of further lawsuits against the tobacco companies, and other factors. If tobacco payments fail, the investors accept the loss, not the County.

Tompkins County will join a pool of 18-20 counties organized by the New York State Association of Counties (NYSAC). NYSAC is working with Paine Webber and First Albany to sell the bonds. The County will set up an independent local development corporation to handle the bonds and the proceeds, which could arrive by the end of this year. Use of the funds is legally limited to capital projects, and the money must be spent within five years.

The vote reversed the Board’s 6-6 defeat of securitization two weeks ago, when three Board members were absent. Charles Evans took advantage of a rule of the Board that allows a failed resolution to be re-introduced at the next meeting by a member absent from the vote.

Those voting in favor of securitization were Barbara Blanchard, Charles Evans, Barbara Mink, Peter Penniman, Frank Proto, Thomas Todd, George Totman, and Daniel Winch. No votes were cast by Susanne Davis, Tim Joseph, Dooley Kiefer, Michael Koplinka-Loehr, Michael Lane, Nancy Schuler, and Stuart Stein.