Mayor says Buffalo deserves more Erie County sales tax money

This is a controversial and complex issue. No municipality can get a bigger share without someone else getting less for its roads, schools or other services.

Of the 8.75% sales tax paid by Erie County residents, more than half stays in the county and is distributed according to a complex formula that benefits cities, towns, school districts and public transportation .

“We really need to talk about inequity,” Brown said during a meeting with Buffalo News editors and reporters. “We’ve been talking about this for a few years, and it continues to go unnoticed.”

He pointed out that Erie County’s sales tax rate is higher than most other counties — Monroe and Onondaga counties charge 8 percent — and yet Buffalo receives less money from the tax for sale than Rochester or Syracuse.

The mayor has been pushing for years for Buffalo to get a bigger piece of the sales tax revenue pie, and he’s resurrecting the issue again now that his latest budget proposes a 9 percent increase in property taxes.

“The sales tax collected by Erie County in 2022 was over $1 billion,” Brown said. “The city of Buffalo received $86 million. More than a billion dollars and the largest municipality in the county received $86 million.

Brown misstated how much the city received in sales tax money. The city actually received $113.5 million during this fiscal year 2022 period, according to the Buffalo Comptroller’s Office. The following fiscal year, the city received $111.3 million.

But he’s right that Buffalo received less sales tax money than Rochester or Syracuse, two upstate cities smaller than Buffalo. It does not, however, take into account the extent to which Monroe and Onondaga counties share money with towns and cities, nor how much those counties rely on property taxes to make ends meet.

Here’s how sales tax money is distributed in Erie County.

Of the 8.75% tax, the State automatically keeps 4%.

What happens to the remaining money varies from county to county. Some counties keep everything. Others, particularly those located in urban centers, share their sales tax revenue with their cities. Some also provide money to towns and villages. Others, like Erie County, also provide a portion of the sales tax to school districts.

Of the 4.75% that remains in Erie County, 3% is divided among cities, towns, school districts and the Niagara Frontier Transportation Authority. This arrangement dates back to the 1970s.

Due to subsequent financial crises that Erie County faced, the county received an additional “temporary” sales tax that totaled an additional 1.75%. This temporary, but in reality permanent, income is then divided into 1% and 0.75%. Of that 1 percent, $12.5 million is shared with cities and towns, with the remainder retained by Erie County. The county also keeps the entire 0.75% sales tax.

When you add that up, of the sales tax revenue that isn’t returned to the state, Buffalo gets 11%, the county keeps 55% and the remaining third is shared with other cities and school districts, according to the Erie County Comptroller. Office data.

Arguments about the fairness of this arrangement have existed for a long time.

In 2008, then-Amherst Town Supervisor Satish Mohan called the sales tax distribution formula “unfair, inequitable and irrational.” He wanted the sales tax to be shared with the suburbs.

In 2015, former lawmaker and county executive candidate Ray Walter complained about the “unequal distribution” of county sales tax money. He wanted more money to flow to cities and school districts.

Brown argues that more of the county’s sales tax should flow into the city, not out.

“The city is still not getting its fair share based on that extra 1 percent,” Brown said. “It impacts the poorest people in this area living in the city of Buffalo.”

The Buffalo News gathered information on sales tax sharing from the Monroe County Department of Finance, the Onondaga Comptroller’s Office and the Erie County Comptroller’s Office and Budget Office to see why other counties are more generous than Erie County in sharing sales tax revenue.

Monroe County provided the city of Rochester with $195.4 million in the 2022-2023 fiscal year, the largest amount received by any of the three largest cities in the upstate.

A formula established in 1985 requires that Rochester and Monroe County each receive about a third of the local sales tax money, with school districts, cities and towns sharing the remaining third. There are nuances to this formula that may result in Monroe County receiving even less. Because Monroe County receives a very limited amount, its budget relies much more on property taxes.

Property taxes make up only 14 percent of Erie County’s budget, but make up a third of Monroe County’s budget.

Onondaga County is a different story. Despite having less than half the population of Erie County, Onondaga County gave Syracuse a similar amount of sales tax that Erie County gave Buffalo during the fiscal period 2022-23 – $114.3 million.

But Onondaga County still managed to keep 75 percent of its local sales tax money — far more than Erie County. This is possible because Onondaga County does not pay any sales tax to its cities and towns.

Onondaga County Comptroller Marty Masterpole said the political stars aligned with both a mayor and county executive sympathetic to the city’s interests in 2010. There was also downward pressure from the state’s share, he said. Despite protests from cities and towns, the Onondaga County Legislature voted unanimously in favor of the change.

It’s hard to imagine that happening here.

Brown wants to call on state lawmakers to change the sales tax formula because he won’t get support at the county level for doing so. This was borne out in Buffalo News conversations with county leaders.

“It’s a recipe for disaster,” said Erie County Democratic Legislator Howard Johnson, who represents a district in the city of Buffalo.

He and other lawmakers spoke of the frenzy that would ensue among all the county’s municipalities if the sales tax sharing agreement was reopened for changes.