ALBANY — Fearing the new federal tax code will hurt local treasuries, the group representing county governments is urging lawmakers to embrace sports betting and put sales tax on all internet purchases as ways to generate new revenue.

New York, already the epicenter of illegal sports betting, could see a major windfall if the nation's highest court knocks down a federal statute blocking wagering on athletic contests here and in 45 other states, said Stephen Acquario, director of the New York State Association of Counties.

"We've tapped the property-tax well in New York now until it is just about dry," he said in an interview.

High taxes are a direct result of unfunded state mandates that compel counties to pay for Medicaid and many other services, he said.

Giving the green light to sports betting, he suggested, "is one way the state can begin to pay the debt that is owed to local governments and communities."

Acquario and associations representing town and city governments have all been evaluating the proposed $168 billion state budget expected to be completed by Gov. Andrew Cuomo and lawmakers over the next eight weeks.

Looming over the negotiations are concerns about provisions in the new tax code that reduced the deductibility of state and local taxes.

Cuomo argues New York has for years been shortchanged by the federal government and says the new tax code amounts to an "economic missile" that will cost New Yorkers $14 billion.

 

BETTING BILLIONS

In anticipation that the U.S. Supreme Court will issue a ruling this year that allows sports betting where it is now prohibited, legislation has surfaced in some 20 statehouses across the country to facilitate gambling on professional and college games.

Acquario said that while it is impossible to project how much revenue could be captured from an activity that is now illegal in all but four states, "all experts agree this change would involve billions, not millions, in wagers placed in New York state."

If the federal ban is struck down, as some Supreme Court observers predict, gaming operations could become operational within 180 days, he noted.

NYSAC supports allowing existing New York gaming licensees — Off-Track Betting, racetracks, casinos and parlors with video lottery terminals — to host sports betting, Acquario said.

"This would spread out the revenue and support local jobs," he said.

With some existing gaming facilities already experiencing cannibalization of their business after the state opened new casinos last year, their viability could be further jeopardized if they are left out of sports-betting action, he suggested.

 

INTERNET TAX

Another potential revenue bonanza for state and local governments could become available via Cuomo's push to clamp a sales tax on all purchases from Internet retailers.

Sales tax is not collected now from some online stores, such as Etsy and Amazon Marketplace.

Imposing the sales tax on all internet purchases would yield an estimated $159 million annually for the state and a similar amount for local governments, state officials said.

Cash-hungry local and county governments support the governor's proposal, though the New York Association of Towns has one caveat. Director Gerry Geist said disbursement decisions for local sales-tax funds should not be left to the counties.

"While some counties share the local sales-tax revenue, others do not, depriving towns of this essential benefit despite the numerous services towns provide," Geist told a panel of lawmakers evaluating Cuomo's spending blueprint for the fiscal year that begins April 1.

 

SHARED SERVICES

Geist's group is also pushing back at Cuomo's proposed mandate that local governments participate in his shared-services initiative, designed to lower property taxes by offering incentives for them to consolidate programs and cooperate in the delivery of local services.

"We believe that this program should be fully evaluated before making it permanent or introducing any new shared-services mandate," Geist said.

Similar reservations were registered by Peter Baynes, director of the New York Conference of Mayors. He said local governments, acting without gubernatorial edicts, have for years found ways to share services and make them more efficient.

"The legislature needs to let this experiment play out and truly evaluate its results," Baynes said of the proposed Cuomo mandate.

Division of the Budget spokesman Morris Peters contended the program has been a success, noting the proposed budget would provide $225 million to match the savings achieved from service-sharing plans crafted by local government officials last year.

"This support will continue to empower local governments to implement actions that reduce the property-tax burden on their taxpayers," he said.

 

Email Joe Mahoney:

jmahoney@cnhi.com

 

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