Cuomo restores AIM funding through internet sales tax revenue

Gov. Andrew Cuomo announced on Feb. 15 that he would use $60 million in revenues from sales taxes on out-of-state internet marketplaces to continue to fund the state’s Aid and Incentives to Municipalities program. The program provides funds for towns and villages, including Valley Stream, to use in their general funds.

The announcement comes about a month after Cuomo presented his original state budget proposal, which would have cut AIM funding to towns and villages that received less than 2 percent of their revenue from the aid in 2017. The Town of Hempstead would have lost $3.8 million worth of revenue, and the Village of Valley Stream would have lost more than half a million dollars.

“The original proposal only impacted localities receiving a relatively small amount of money, but I’ve been contacted by mayors and local officials who say in these tough times it would still be a challenge for them,” Cuomo said. “That is why we are revising the executive budget to use internet sales tax revenue to make these impacted localities whole.”

Under the proposal, counties would collect sales tax revenue from out-of-state online retailers starting on June 1. The counties would then be directed to share that revenue with the towns and villages that lost AIM funding.

Cuomo said that having out-of-state internet marketplaces pay sales taxes would level the playing field for local brick-and-mortar retailers, who already pay sales taxes. He also said that eliminating the internet tax advantage for out-of-state retailers would generate $390 million annually for local governments.

Town of Hempstead Supervisor Laura Gillen, who last month instructed department heads to identify spending cuts to offset the potential loss of state aid, said she was grateful that Cuomo restored the funding.

“I want to thank Governor Cuomo for working with the town and restoring $3.8 million dollars’ worth of vital funding for essential services that our residents rely on,” Gillen said. “Hempstead Town would have taken the biggest hit out of any other municipality in the state. Therefore, restoration of this funding has been my top priority.”

But Valley Stream Mayor Ed Fare said he did not favor Cuomo’s proposal to use sales tax revenue to fund the AIM program. In a statement, he said he would like the funding to be restored “without the addition of a new tax on our residents.”

“People are taxed enough already,” Fare said, adding that it was “very disingenuous to create a new tax.”

Other town and village officials across the state agreed with Fare. Representatives of the New York Association of Towns and the New York Conference of Mayors said that Cuomo’s sales tax proposal just “repackages” the money. According to Gerry Geist, executive director of the AOT, AIM should be funded independently, and should not be linked to internet sales tax revenue.

“Restoration of this $59 million is in reality robbing one ... taxpayer to pay another,” said Peter Baynes, executive director of NYCOM.

“Rather than playing this shell game, New York state should be fulfilling its obligation to increase its investment in municipal aid and the property tax relief it will generate,” Baynes said. “Imposing a new mandate on counties to make up for the state’s cut to villages and towns will only further harm New York’s already overburdened property taxpayers.”

Geist noted that counties would be required to make up for a town’s lost AIM money with sales tax revenue. Under the proposal, he said, counties would distribute the AIM funding to the towns and villages. “This proposal does nothing to reduce property taxes, and takes money out of one hand to pay the other,” Geist said.

State Assemblywoman Michaelle Solages, a Democrat from Elmont, also said that Cuomo’s proposal “sets a terrible precedent” because sales tax revenue is unreliable, and as a result local villages could lose out on potential aid.

“Municipalities cannot predict how much will be collected, generated, or whether it will actually make up for AIM cuts to towns and villages,” Solages said in a statement, adding that she does not support the current plan and would urge her colleagues to “provide a true restoration of aid as well as a long overdue increase in municipal aid.”

State Sen. Todd Kaminsky, a Democrat from Long Beach, said that he and his colleagues would also “be working diligently” to develop a budget that contains adequate funding for municipalities without increasing taxes on residents.