What appears to be a legislative oversight could have serious impact on the budgets of dozens of towns and villages in Erie County and Nassau County.

The Office of the State Comptroller sent a letter to municipal leaders late last week, warning them they may not get payments they have customarily received from the state in past years. During this year’s budget process, the state eliminated Aid and Incentives for Municipalities (AIM) for 1,326 towns and villages it deemed did not rely on the funding.

It cut the program for any of those municipalities where AIM funding represented less than 2 percent of 2017 total expenditures. Under the new law, all cities and 137 towns and villages in New York continued to get the funding.

In a compromise, the state said it would restore that funding for the rest of municipalities with additional revenue from the new internet sales tax. The state comptroller’s office is now responsible for withholding county sales tax and distributing the amount of lost AIM funding, now called AIM-related funding, to the towns and villages.

However, the Comptroller’s Office said the new law did not take into account that Erie and Nassau Counties have fiscal control and stability boards in place. A conflicting law requires that those boards receive all collected sales tax in the county, leaving no mechanism for the money to be distributed to the towns and villages.

The New York State Division of the Budget is currently working with Erie County and Nassau County to explore option to remedy this situation prior to the December 15 statutory payment deadline for towns and villages with a fiscal year end of December 31 or February 28,” the comptroller’s letter said. “Because it is unclear when a workable solution will be identified, you should consider the impact on your current and upcoming budget. We will keep you informed of any new developments.”

In a letter, to the governor and the comptroller, state Senator Pat Gallivan, R-Elma, said the money needs to be made available for municipalities’ upcoming budgets.

“Any lack of AIM related funding would ultimately have a deleterious effect on the residents of these municipalities,” he wrote.

According to data from OSC, the state has a $4.4 million responsibility to Erie County and an $11.4 million responsibility to Nassau County for the 2020 Fiscal Year.

A spokesperson for the Division of the Budget released a statement Thursday, saying:

“We will ensure that every locality receives AIM-related funding and every county gets its share of the $210 million in additional new revenues including those generated by capturing Internet sales that have previously avoided taxes.”

Erie County Executive Mark Poloncarz also released a statement, saying:

“My administration is aware of the issue. For many municipalities in Erie County, AIM funding represents a significant portion of their budgets and as such, the problem must be resolved. Erie County is doing everything possible to resolve the hyper-technical log-jam in the OSC and ensure payments are made to municipalities this December on schedule. In fact, Erie County’s Division of Budget and Management has already held conference calls with the OSC, the NYS Division of Budget, the ECFSA, and the BFSA to work through the problem, and another conference call is scheduled for next week. We also plan to send a formal letter to the OSC emphasizing how important it is that municipalities receive on-time AIM payments. Erie County remains optimistic the situation will be successfully resolved before the December payment is due.”