NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1900
SPONSOR: Hooper TITLE OF BILL: An act to amend the tax law, in relation to extending
the authority of the county of Nassau to impose hotel and motel taxes in
Nassau county; and to amend chapter 179 of the laws of 2000, amending
the tax law relating to hotel and motel taxes in Nassau county and a
surcharge on tickets to places of entertainment in such county in
relation to extending certain provisions thereof
PURPOSE: This bill extends until December 31, 2013 Nassau County's
authority to impose: (i) a hotel and motel tax; (ii) a surcharge on
tickets to places of entertainment in the County; (iii) a charge for
searching and copying police accident reports and photographs; and (iv)
charges for services rendered by the Nassau County Traffic and Parking
Violations Agency.
SUMMARY OF PROVISIONS: This amendment to 1210 of the State Tax Law
carves out a separate classification for incorporated villages of 43,000
or more residents, and requires the County of Nassau to earmark a
specific, percentage of the hotel, motel and entertainment tax generated
solely from within the borders of the major Villages of Hempstead and
Freeport and return it to the taxpayers of those large city-sized
villages for tax relief. The legislation requires that the villages of
Hempstead and Freeport be included in the apportionment of the Hotel,
Motel and Entertainment tax based upon their substantial populations and
similar characteristics to New York State cities of similar population,
size, independence and socio-economic conditions.
EXISTING LAW:
The provisions of this law are currently set to expire on December 31,
2011.
JUSTIFICATION: According to the 2000 federal census (see below), two
incorporated villages in the County of Nassau, the Village of Hempstead
(population 56,554-largest in New York State) and the Village of Free-
port (population 44,026 - 2nd largest in New York State) have popu-
lations vastly larger than the official populations of either of the
only two cities in the County; viz, the City of Glen Cove (population
26,622) and the City of Long Beach (population 35,462). Significantly,
the Village of Hempstead's population alone is nearly equal to the total
2000 decennial census' combined populations of both the cities of Long
Beach and Glen Cove. In fact, factoring in the historical minority group
undercount, its actual population exceeds the combined populations of
those two cities.
Both villages are in the Town of Hempstead but receive no revenues or
benefits from the Town Hempstead Village provides water, sewer and
supplemental police services to the Town, which is tax exempt and pays
no taxes to the village. Moreover, were the villages of Hempstead and
Freeport cities, they could seek their own sales tax authority and
receive a substantial portion of the sales and use taxes generated with-
in their borders pursuant to the County's LGAP set forth in 1262-e of
the Tax Law.
Despite the large size of these two villages and the huge amount of
sales and use taxes generated within their borders, they receive a rela-
tive pittance in reimbursements under the current local government
assistance formula utilized by Nassau County to return sales tax dollars
to its local municipalities. For example, Hempstead Village and Freeport
Village have many major car dealerships, Home Depots, Staples super-
stores, 24-hour Walgreen mega stores, several major auto parts dealers,
a litany of fast food chain restaurants and many places of entertainment
that generate hundreds of millions of dollars in cross sales and tens of
millions of dollars in attendant sales tax revenue each year. Yet, Hemp-
stead and Freeport receive none of the sales tax revenues that they
would otherwise receive were they cities or independent taxing authori-
ties.
The formula utilized for sales tax revenue sharing set forth in the
current New York State and local Nassau County laws, fails to account
for the substantial obligations of these two large incorporated villages
and is insufficient to properly address the enormous needs of the people
of those villages. The manner in which County sales and use tax revenue
is currently distributed fails to provide adequate real property tax
relief for Hempstead and Freeport residents and has a discriminatory
effect in that the other cities and villages in Nassau County do not
have similar sized populations that demand a commitment of similar
levels of essential government services. In fact, the effect of the
current law is to redistribute a large portion of the sales tax revenues
generated in those two large villages as subsidies to the cities and
smaller villages that generate comparatively small amounts of sales
and/or use tax revenue. To make matters worse, under the current statu-
tory formula, the unincorporated villages under the umbrellas of Nassau
County's three towns double-dip by sharing in both the town and village
subsidies.
Clearly, under the current legislative regime, those Villages do not
receive their fair share of sales tax revenues generated within their
borders. In fact, they receive an infinitesimally small portion of the
sales tax revenue they generate as a result of the enactment of 1210 and
1262-e of the Tax Law; e.g., only a combined $265,000 of the $30 Million
to $100 Million in 2010 sales taxes generated in those two Villages were
returned to them in the following tax year. This inequitable sharing and
distribution of the sales tax revenues to these large municipalities is
even more egregious when seen through the prism of their need to direct-
ly and indirectly service substantial portions of Nassau County's poor
and disadvantaged populations. Directly to those residing within their
borders and indirectly through services to the numerous patrons of the
tax exempt social service agencies that Nassau has chosen to heavily
concentrate in those Villages.
Both Hempstead and Freeport are majority-minority municipalities with
substantial concentrations of seniors, unemployed and underemployed
indigenous residents, newly arrived immigrants and idle youth groups, as
well as social service patrons who require many services that other
communities in Nassau County need not address. In addition, Hempstead
and Freeport have the second and third largest police departments, after
Nassau County force, yet they receive no sales tax relief to fund that
very costly public service. The residents of those villages also have to
deal with spiraling school tax costs related to the extraordinary
bi-lingual education mandates that are unique to those villages. In
addition, they are straggling with the huge waste management and water
and sewer challenges that attend overcrowding. Accordingly, the current
return on sales tax revenue generated in those villages is highly ineq-
uitable given the size of the census area of Hempstead and Freeport and
the mix of poor suburban and urban-type populations that they must
serve.
In light of the paltry sum the County may or may not choose, at its
discretion, to allocate among all the county villages (1/6 of 3/4%), the
payment of large sales tax refunds to its small cities, the double
payment currently being made to the towns and the long term inequitable
treatment of its large majority-minority villages, it is clear that the
sales tax sharing distribution formula set forth in 1262-e is wholly
discriminatory and grossly unfair. This legislation seeks to identify
and acknowledge (1) the large populations of Hempstead and Freeport in
relation to Nassau County's cities and other villages, (2) the substan-
tial socio-economic issues that must be addressed by those large
villages and (3) the substantial contribution of sales and use tax
revenue generated by those large villages to the overall amount returned
by the State to Nassau County.
The vast inequities sought to be partially cured by this legislation
address over 20 years of shortchanging Nassau County's two major incor-
porated villages, which have seen lost revenues in the tens of millions
of dollars over that period. This disparate treatment must be systemat-
ically attacked in order to rectify an ongoing injustice. The current
legislation is a small part of the remedy.
LEGISLATIVE HISTORY: Ch. 287 L. 2009 2011-2012 - A7912
FISCAL IMPLICATIONS: None to the State.
EFFECTIVE DATE: Immediately.
