Gloomy outlook for bed tax creates budget problems in Buffalo

BUFFALO, N.Y. — The state Legislature does not appear ready to pass a law allowing the city of Buffalo to impose up to a 5 percent additional bed tax for overnight rentals at hotels and motels located in the city limits.

This amount would be in addition to the rate charged by the county, which is 5% of the room rate for hotels with more than 30 rooms and 3% for those with 30 or fewer. If the legislation is not passed, it will create a projected revenue hole of more than $4 million in Buffalo’s already approved budget.

Assembly Majority Leader Crystal Peoples-Stokes, D-Buffalo, introduced the bill last week, but said Spectrum News 1 she never intended to sit out this session with only a few days remaining.

Instead, she says she hopes to start a conversation about how area leaders can help the city improve its financial situation.

“Anytime you talk about raising taxes, it’s a long discussion and it takes a lot longer than four days, and I understand that, but I also understand that at some point the conversation has to start, because without question, there are financial issues facing the city of Buffalo and I want to help fix them,” she said.

The legislation does not have a sponsor in the state Senate. One potential sponsor, Sean Ryan, D-Buffalo, said the hospitality, tourism and convention industries have expressed concerns to him. He said if rooms cost more in Buffalo than in the rest of the county, it could drive guests and conventions out of town.

“We just can’t resort to one-off situations and gimmicks,” Ryan said. “The city needs to address its structural issues to understand why it is in such a large deficit. Not getting it won’t kill the city’s budget, but we fear it will kill the tourism industry.”

Buffalo Common Council Member Mitch Nowakowski, D-Fillmore, said the council does not expect the Legislature to pass the bill until at least the next session.

“I am not waiting, as President of Finance, for someone to come and save us and give us a windfall of money to equalize this budget, that we are going to have to start moving forward with honesty and duty, by reducing spending in the city of Buffalo instead of very precarious revenue lines,” he said.

Nowakowski and others have called attention to the budget’s structural problems that they say will eventually deplete the city’s reserves. He said the city relies on speculative, non-recurring revenue sources, including the extra bed tax, money from the Seneca Nation under a new Gaming Compact not yet negotiated and federal funds of the American Rescue Plan, to balance the budget this year.