ALBANY -- The state Legislature left the Capitol early Thursday without an agreement to extend county sales-tax rates, leaving local governments with uncertainty over their top revenue source.
The sales-tax rates for counties, which is typically 4 percent, got caught up in a fight over extending mayoral control of New York City schools.
And the Democratic-led Assembly and the Republican-controlled Senate failed to reach a deal on mayoral control, making the sales-tax extenders a casualty.
The state Association of Counties said the inaction would leave a $1.8 billion collective hole in the 53 counties that are awaiting state lawmakers to extend their current sales-tax rates.
Some cities also face a fiscal dilemma: A mortgage tax in Yonkers expires Aug. 31, and its own sales tax expires in November -- creating uncertainty over the city's ability to certify its budget for the fiscal year that starts July 1.
"There are challenges we are trying to deal with," said Assemblywoman Shelley Mayer, D-Yonkers.
Lawmakers ended the six-month session early Thursday, and Assembly Democrats tied the re-authorization of local sales taxes -- which is required every two years -- to the city's mayoral control fight.
So without an extension of mayoral control, sales-tax rates for counties across New York were left in limbo.
Some legislators criticized tying the issues together, while others defended the move.
"No, nothing should be tied together. But that’s the way they do things down here," said Assemblyman Mark Johns, R-Pittsford, Monroe County.
Assemblyman Thomas Abinanti, D-Mount Pleasant, Westchester County, said the issues are connected because they deal with local control.
"I think all renewals should be done at the same time – whether it’s a sales tax or other types of legislation," he said. "We shouldn’t be choosing one group that we like versus one group that we don’t like."
Still, legislative leaders indicated late Wednesday they will likely return to the Capitol for a special session later in the year to address mayoral control -- which expires at the end of the month -- and the sales-tax rates, which expire before year's end.
Without an extension of the sales-tax rate, counties' tax would revert to 3 percent. The state charges its own 4 percent on the sale of goods and services.
Counties warned that without the extension, it would lead them to have to increase property taxes -- their other main revenue source -- to make up the difference.
Albany and Broome counties would each need to raise property taxes by 43 percent to maintain services, the state Association of Counties said. Orange, Rockland, Ulster and Dutchess counties would all need to raise county property taxes by 30 or more to balance the books, the group said.
"In one fell swoop, state leaders could undo everything that has been done in the past ten years to curtail property tax increases," William Cherry, the president of the state Association of Counties, said in a statement.
"We could be looking at property tax increases equaling $1.8 billion just to keep programs and services operating locally."
Gov. Andrew Cuomo introduced a bill to end local governments' needing state legislative approval every two years to continue their current sales-tax rates. The measure passed the Senate on Wednesday night, but didn't get a vote in the Assembly.