Capital Region

Local governments face severe financial hit in New York State

"That means everybody is going to suffer, it's just a  matter of how much," Saratoga County Administrator Spencer P. Hellwig
Saratoga County Administrator Spencer Hellwig
Saratoga County Administrator Spencer Hellwig

CAPITAL REGION — The economic disruptions caused by the COVID-19 pandemic could cost counties across the state a total of at least $1 billion in lost sales tax revenue, according to a report from the New York State Association of Counties.

The report found that county governments could see their collective sales tax revenue decline anywhere from $350 million to $1 billion this year, depending on whether the business closings and cutbacks and bans on large gatherings caused by the state and national response to the novel coronavirus outbreak result in a mild or severe recession.

“Our county leaders understand that all levels of government and all facets of society will be severely impacted by the response to COVID-19, but we also believe that the state and federal government need to invest in our communities because we are on the front lines of fighting the spread of the coronavirus, and helping the people most impacted by an economic downturn,” said NYSAC Executive Director Stephen J. Acquario.

The estimate of impacts on county governments follows a report by state Comptroller Thomas J. DiNapoli, who said state revenues would be $4 billion to $7 billion short of his earlier estimates, depending on how severe the economic downturn is. The state was already facing an estimated $6 billion deficit. The new state budget is due April 1, and Gov. Andrew M. Cuomo has said he intends to meet that deadline.

The state’s financial situation has increased fears that state legislators will cut aid to local governments.

The report doesn’t try to estimate the additional costs county governments will incur because of the outbreak, but counties are spending more. Both Schenectady and Saratoga counties have made emergency allocations of $1 million to pay for additional personnel and equipment to respond.

Counties are also likely to incur unanticipated social and human services costs because of people who lose their jobs temporarily or permanently because of the pandemic, which is deeply impacting the restaurant, retail and other service industries.

“These revenue forecasts are deeply troubling for local governments and property taxpayers,” said NYSAC President John F. Marren, a member of the Ontario County Board of Supervisors.

The NYSAC estimates — which officials there acknowledge are very uncertain —  that local counties could see a severe sales tax hit. It gave the following estimates of a full-year revenue loss:

— Albany County could lose between $11.2 million to $34 million.

— Fulton County could lose between $1 million and $3.2 million.

— Montgomery County could lose between $1 million and $3.2 million.

— Saratoga County could lose between $5.9 million and $24 million.

— Schenectady County could lose between $3.6 million and $11 million.

— Schoharie County could lose between $583,000 and $1.8 million.

Montgomery County Executive Matt Ossenfort said the estimated loss for that county, which has a roughly $118 million budget, looks reasonable. But in addition to the virus-related impacts, he said is is worried about the impact of the current oil price war, because a disproportionate share of his county’s sales tax revenue comes from gasoline sales.

“This is something we can get through, because we budget conservatively,” Ossenfort said. “If this is relatively quick and we’re back by summer, it could be a bright spot.”

In many counties, sales tax revenue is shared with towns, and some cities, including Saratoga Springs, Gloversville and Johnstown, collect their sales tax separately, so all are expected to feel the pain of any sales tax revenue decline.

“That means everybody is going to suffer, it’s just a matter of how much,” said Saratoga County Administrator Spencer P. Hellwig. “I can’t speak for the towns, but I can say that we’re going to take a close look at trying to reduce the operating costs this year so we don’t have to draw down on the fund balance, but under any circumstances, services we planned for this year will not be disrupted.”

The county Board of Supervisors voted Tuesday to authorize an additional $1 million in spending on coronavirus response and public health, which he said is a good investment to prevent things from getting worse. “The only way we can begin to manage the challenges is to minimize the amount of cases where people have to be quarantined and possibly hospitalized,” Hellwig said.

The Saratoga Springs City Council voted Tuesday to create a new city position of budget director with a $77,680 salary. While she said she was wary of new spending, city Finance Commissioner Michele Madigan said a full-time budget director will help the city get through the situation. Lynn Bachner, a former two-time deputy commissioner of finance and current executive assistant to Mayor Meg Kelly, was named to the post.

“Our efforts to protect the health, safety, and welfare of our citizens and visitors are dependent on our ability to manage the economic impacts of the current, and rapidly changing situation,” Madigan said.

With the hiring, Deputy Finance Commissioner Deidre O’Dwyer-Ladd was furloughed, though she has been an “asset to the city,” Madigan said.

Reach staff writer Stephen Williams at 518-395-3086, [email protected] or @gazettesteve on Twitter.

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