How short-term rentals, storm damage and a decline in state aid impact Essex County’s $132 million budget
By Tim Rowland
Outside forces have pushed the Essex County budget to the brink this fall, even as county assessments — driven by short-term rental markets — value county property at an unprecedented $1 billion more than the year before.
Viewed in whole, the $132 million budget reflects many of the Adirondack’s most pressing issues and demonstrates how matters from short-term rentals to more extreme weather patterns are dinging the wallets of park residents and impacting government services.
The Adirondack Explorer thanks its advertising partners. Become one of them.
“It’s been death by a thousand cuts,” said Essex County Supervisors Chair Shaun Gillilland, who said the county was acting decisively to avoid the type of crisis it experienced a decade ago when it relied too heavily on its savings (known as a fund balance) to balance the budget, leaving unsustainable gaps that took years to fill.
This time, county supervisors are taking the rare step of breaking the 2% tax cap to keep from having to dig too deeply into their reserves. Additionally, supervisors are shifting some of their savings into restricted capital accounts dedicated to unforeseen events, most notably damaging storms that are the product of climate change.
Property tax changes
Technically, the county tax rate will go down by a penny, but homeowners whose assessments have risen more than average could be on the hook for higher taxes, as will residents of towns that have been slow to keep their property valuations consistent with real estate market gains.
Those increases pushed county property valuation up 10% over the previous year, gains County Manager Mike Mascarenas said appear to be driven by the hot short-term rental (STR) market. STRs further complicate the process because assessors are powerless to assess a higher rate to profitable, corporate-owned STRs than they are a private residence of similar size right next door.
The Adirondack Explorer thanks its advertising partners. Become one of them.
Waiting on short-term rentals bill
On top of that, the county’s financial problems would be greatly dissipated if Gov. Kathy Hochul were to sign a bill passed earlier this year by the Assembly applying sales tax to short-term rentals, same as it does for traditional hotels.
“I’m not going to second guess the governor, I’m sure there are reasons,” Mascarenas said. “But if there were sales tax placed on STRS, we would have the additional revenue that we need. We’d be under the tax cap and we’d be out of here; everybody have a happy holiday.”
Mascarenas said a sales tax applied to STRs would raise $2 million in revenue for the county.
Other factors contributing to budget woes
Other Albany decisions have been hurtful as well, including a shift of more than $800,000 in Medicaid costs to the county, and refusing to pay what has traditionally been its 12.5% share of storm damage repairs. FEMA typically picks up 75% of the tab, but now the county has had to pay its 12.5% and the state’s share as well, Mascarenas said.
The Adirondack Explorer thanks its advertising partners. Become one of them.
That’s meaningful because for two years running, major storms — both hitting on July 10 — have caused extensive damage to roads and bridges. “My guys have all said they’re going to call in sick this July 10,” said Jim Dougan, the county’s director of public works.
RELATED READING: Adirondack town officials discuss emergency responses as part of future preparedness
Rather than slapdash repairs, the county and towns are taking the more expensive and time consuming route of hardening problem spots so they will not have to re-repair the same washouts in coming years.
Staffing shortages
Finding employees to do the work remains difficult, Mascarenas said. The number of open positions in the county’s 500-person workforce now stands at just over 50.
The Adirondack Explorer thanks its advertising partners. Become one of them.
While the number of openings has been higher in the past, ongoing staffing shortages have become such an issue that the county will lose out on $700,000 it was paid to house inmates at the county jail, for lack of guards.
To remain competitive in the labor market, wages in the county are up about $750,000 this year, but even so, Mascarenas said, a lack of housing is still impacting the county’s ability to hire adequate staff.
The financial situation today is much different from the pandemic years, when money from federal Covid-19 appropriations was pouring into local governments that were able to parley it into addressing critical needs including public health, child care and affordable housing.
Breaking the tax cap
Breaking the state-imposed tax cap is something local Adirondack governments are loath to do, if for no other reason than it’s the standard by which — in the eyes of tax-conscious citizenry — elected officials are judged.
But local officials grouse that the cap is arbitrary and often unworkable, and besides that, any imposition about frugality coming from spendthrift lawmakers in Albany is akin to the town drunk imploring his fellow citizens to sober up.
“Every April, we seem to be getting hit with reductions or new (spending) mandates to meet the needs of the state and federal government,” Mascarenas said.
State mandates
Perhaps the most glaring example is Medicaid, where the state passed generous new benefits and then when it was unable to pay for them, shifted the cost to local governments. Of Essex County’s $28.3 million tax levy, Medicaid eats up nearly a quarter of the revenue.
All told, nearly four of every five dollars the county receives in property taxes, is subjected to state mandates for programs that range from special education pre-kindergarten to criminal-defense costs.
On a chart of expenses versus revenue, the county’s revenue line has typically rained above the expense line, but without this year’s adjustments that would change over the next couple of years. “When you continue to lose revenue at the rate we’re losing it, and your expenses continue to go up,” he said, “you’re running into a circumstance where those lines are going to cross.”
Photo at top: A home on Albee Lane in the town of Essex after the July 10 storm. Debris from Split Rock Mountain filled the house’s yard up to its Adirondack chair seats. Photo by Gary Heurich
I believe municipalities are not actually “powerless to assess a higher rate to profitable, corporate-owned STRs.” New York State allows for a two-tiered property tax rate called the Homestead Tax (NYS Real Property Tax Law, Article 19, § 1903) which would allow non-owner-occupied properties to be taxed at a higher rate than owner-occupied properties. The City of Rochester utilizes it presently and so, too, does the Town of Newcomb according to NYS records (https://www.tax.ny.gov/research/property/legal/localop/art19.htm). It would require statutory adoption by the locality and some other administrative changes but it is a possibility, I believe.
STRs and other corporate owned rentals as a whole are damaging to our communities and should pay for the damage they’re causing by paying a fair share. And, of course, STRs should be subject to occupancy taxes no different than hotels.