Prospective home buyers may soon be paying more in mortgage tax if county and state Legislatures approve a measure to increase the tax a quarter percent.

The Cayuga County Legislature's Ways and Means Committee Tuesday passed by a narrow margin a resolution that would increase the county mortgage tax to 1.25 percent in an effort to raise money to pay for the county's new mental health facility that will be built on North Street in Auburn.

“No tax is a good tax,” said Legislator Michael Chapman, who voted in favor of the tax.

“Cayuga County needs to somehow, some way, get into the 21st century,” Chapman said. “We have to be accountable and ensure that these services going forward are the best we can provide.”

By upping the one-time mortgage tax by a quarter percent on new mortgages, the county could glean as much as $500,000 to put toward the project, said County Clerk Sue Dwyer, who crunched numbers based on 2009 and 2008 mortgage totals. The current mortgage tax is 1 percent.

The proposed tax increase would charge an extra 25 cents for every $100 in principal debt. That means someone with a $100,000 mortgage would pay an additional $250, on top of what their normal mortgage tax would be, said Dwyer, who does not support the increase.

“It's not going to be catastrophic, I suppose,” said Phil Colby, board president for the Cayuga County Association of Realtors. But in times of economic hardship, even small tax increases can be a significant strain, he said. “The problem is whether or not people within the community can support additional taxes.”

The logic behind increasing the mortgage tax is that it would generate much-needed revenue for capital projects without burdening the entire community.

But fewer people being affected is not necessarily a good thing, said Legislator David Axton, who, along with Raymond Lockwood, voted against the tax increase. Legislators Francis Mitchell, Patrick Mahunik and Chapman voted in favor of the tax. Legislator Ann Petrus was absent from the meeting; Legislator Linda Murphy arrived after the vote.

“It's kind of a discriminatory tax to pinpoint people wishing to invest in the community,” said Axton. He said he understands the county's need for increased income, but said the county should look for alternatives.

“Any tax stinks,” Axton said. But lumping the cost of the project into the tax levy and cutting spending elsewhere would spread the cost among all taxpayers, lessening its severity.

The proposed tax includes a sunset clause, which means it will fade out when the mental health project is paid for. The resolution passed Tuesday asks for a 25-year window for the tax. Legislators have said they hope to minimize the length of the tax, but Axton said he is concerned that there will be no turning back.

“We say, well, as soon as that project is paid off, we'll get rid of it,” he said. “But once you get used to that flow of money coming in, it's tough to turn it off.”

Staff writer Sarah Gantz can be reached at 253-5311 ext. 237 or sarah.gantz@lee.net