New York counties could face serious fiscal problems if the state Senate does not reconvene and pass routine tax bills, an organization representing county governments said yesterday.

The Legislature regularly passes bills that allow county governments to raise sales taxes, but those laws expire Nov. 30, with the exception of the law covering Westchester County.

“Without these sales tax extensions, 2010 will be a chaos year for county governments and particularly for real property tax payers,” Stephen Acquario, executive director for the New York State Association of Counties, said at a news conference. The sales taxes are critical to run government, he noted.

“Without sales taxes the other form of revenue that funds government in New York State is property tax, [but] there is no appetite to be increasing property taxes at this time,” Acquario said. “We need to have legislation approved before the end of this session.”

The Senate remained deadlocked yesterday as Republicans and Democrats offered proposals and counterproposals to resolve the question of who is in charge. It was unclear yesterday whether the Senate would resume its business before the legislative session ends on Monday.

To date, the Assembly has passed extender sales tax bills for 50 of the state’s 57 counties, including the five counties that make up New York City, but only 16 of the bills have passed the Senate. Most of the increases are for one percentage point.

Acquario said in an interview that the taxes in aggregate are worth hundreds of millions of dollars. Counties primarily use sales tax revenue to pay for state-mandated programs, he said. Earlier this month, Assemblywoman Sandy Galef, D-Westchester, introduced A. 8765, which would allow counties to raise sales taxes by up to four percentage points without seeking legislative approval each time.

So far the uncertainty hasn’t had a credit impact, according to Fitch Ratings analyst Ann Flynn.

“The state budget is in place so appropriations and all of that have been established,” she said.

Because most of the taxes don’t expire until November, the Legislature still has time to resolve the issue.

“As time passes and potentially we get closer to deadlines for sales tax extensions, we would consider what the magnitude would be and the respective counties’ responses,” Flynn said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.