Challenger calls surplus too high, wants taxes rolled back

GOSHEN-The county is holding too much of the taxpayers' money in budget surplus, said the candidate challenging incumbent Ed Diana in the race for county executive. "Since Eddie took office we've raised property taxes 25 percent and sales taxes 25 percent," said Michael Edelstein last week. "There are surpluses in the county coffers well beyond the need for reserves and beyond what we need for contingencies." Edelstein and Democrats in the county legislature called for sales and property taxes to be rolled back to "pre-Diana levels." "It doesn't pay to have surpluses when people are so strapped," Edelstein said. Edelstein and several legislators met with the press prior to the regular legislature meeting on July 7. The first item on the agenda was a vote on whether to extend a .75 percent sales tax increase voted in last year. The vote was pulled from the agenda at the last minute. Legislature Chairman Alan Seidman said Governor Pataki has not yet signed the state legislation needed to allow the county to extend the increase. The current county sales tax rate is 3.75 percent. This would decline to 3 percent next year if the legislature does not vote to extend the .75 percent increase passed last year. Sales taxes — county, state, and Metropolitan Transportation District — total 8.125 percent. In a telephone interview Tuesday, Diana disputed Edelstein's figures. The property tax rate in 2001 was $3.71 per $1,000 of assessed property value, while in 2004 the rate was $3.37 per $1,000, he said. This year, the rate was 3 percent less than last year, and he is committed to further decreases, he added. He acknowledged, however, that at the lower rate the county is taking in more money, and many property owners are paying more than in 2001. That's because property values have risen dramatically, and the amount taken in at any given tax rate increases as the property value increases. Diana said the county sets the tax rate but individual towns set the assessed value. The state sets the "equalization rate," which is supposed to iron out differences in towns' assessment practices. "What is under our control is the tax rate, and that has gone down," he said. Edelstein estimated the surplus at $70 million, a figure well in excess of Diana's earlier $50 million to $55 million estimate. On Tuesday, Diana agreed the amount could be as much as $70 million, but added that keeping a healthy surplus has maintained a high bond rating for the county. This reduces the cost of borrowing, he said. The total budget is $515.3 million. "We have a 1AA bond rating, and that's the second-highest in the state. Only Westchester is higher," said Diana. "That means we save on interest rates, and that saves money for the taxpayer." Michael Paduch of Middletown has been the most outspoken of the legislators on the tax issue. He said last Thursday that when Diana was estimating a surplus of $27 million for last year, "I said it would be $52 million. I would bet it will be more than that by budget time." Diana said a $50 million to $55 million surplus is within the range considered prudent for holding unappropriated funds. It would be foolish to simply lower taxes year after year by cutting the surplus too thin, he said. "All our costs are going up," said Diana. "You would not expect your family to live on what it earned five or six years ago, and the county also must take in more to cover its costs." He cited health care, negotiated salary increases, insurance, retirement and materials costs among the increases. The county may have an official surplus figure from its auditors by the August meeting, Paduch said. This would give legislators a reasonable basis on which to vote. Last November, when Diana presented the budget, Thomas Pahucki of New Hampton accused Diana of having raised taxes in 2003 so he could announce a decrease in an election year.