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Counties dealing with sales tax drop

Counties dealing with sales tax drop

Sales tax receipts continued their slide in the first quarter of the year across the Capital Region,

Sales tax receipts continued their slide in the first quarter of the year across the Capital Region, but the dropping numbers are not a cause of concern — yet — officials say.

“It’s too early to panic,” said Wilton Supervisor Arthur J. Johnson, chairman of the Saratoga County Board of Supervisors.

“We projected revenues as fairly flat, and the state does not determine accurate numbers all the time. We still have a fairly substantial fund balance and we will be able to get through the next year.”

Saratoga’s sales tax receipts for January through March this year are down 9 percent, or $2 million, from the same period last year. The county collected $21.1 million in sales taxes. It keeps about half of the total 3 percent local portion and shares the remainder with the towns. The state collects 4 percent on top of the county share. The county budgeted $52 million in total sales tax revenue for 2009.

County leaders said the real test will be second quarter results, due at the end of June.

Jon Stead, administrative officer for Fulton County, said, “One quarter of results really don’t make a trend. We should wait and see how second quarter projections hold up.”

Of six counties in the Capital Region, Fulton was the only one to register an increase for the first quarter. It collected $228,000 more, compared to the same quarter last year. Its total was $4.1 million, up 6 percent.

Sales tax receipts elsewhere in the Capital Region for the first quarter:

u Albany County, down 7 percent, or $4 million, from the same period a year ago, to $56 million.

u Montgomery County, down 6 percent, to $6 million.

u Schenectady County, down 3 percent, to $21 million.

u Schoharie County, down 2.4 percent, to $3 million.

Stead said Fulton County’s total reflects that its sales tax receipts for 2008 were significantly down. “We did adjust our 2009 projections based on 2008 figures,” he said.

Another factor is that Fulton County is generally not dependent on big retail companies to generate sales taxes, Stead said. “Our economy is based on small businesses and retailers. Our business community is stable and they do a good job with their customers.”

“I did not expect Fulton County to be impacted in as dramatic a way as a result. We did not have as far to move, one way or other.”

For the region as a whole, sales tax receipts were down 6 percent, or $7 million, to $110.4 million. In addition, sales tax receipts across the state are down 6 percent, with 10 of the 62 counties showing declines of 8 percent or more for the first quarter, said Mark LaVigne, spokesman for the New York State Association of Counties.

double whammy

Sales tax is one of two prime sources of revenue for counties, the other being property taxes, LaVigne said. “When sales taxes go down there is pressure on counties to offset decreases with increases in property taxes. And right now, there is no appetite among taxpayers and business owners to pay any more property taxes.”

The result, said NYSAC Executive Director Stephen J. Acquario, is that counties face the decision to cut services or lay off workers in order to keep their budgets balanced.

The good news, LaVigne said, is that many counties prepared for projected declines in sales tax receipts last year and are better prepared as a result. “Counties saw the writing on wall last quarter of 2008 and when they enacted their budgets for 2009 in December, they projected lower sales tax for the coming year.”

Also, counties are receiving federal stimulus money this year, which they had not expected when they put their budgets in place last year.

Gary Hughes, Schenectady County legislator, said, “The stimulus was not expected as part of the equation, but we will have to monitor expenses throughout the year.”

LaVigne called the federal money a one-time infusion: “It will help absorb these cuts and help counties to continue to deliver programs and services needed in these tough economic times.”

LaVigne said the state can’t afford for the stimulus package to fail. “When that runs out and we are not better off, all levels of government will be forced to make serious decisions.”

In anticipation of this scenario, LaVigne said NYSAC is advocating for mandate reform and increased flexibility with the state so that counties have more control over their own budgets.

“Counties would like more say over their budgets as they are currently strongly tied to the state budget in many ways,” LaVigne said. “The programs we provide are state services, and many are partially funded by state. Counties are always concerned about reductions in the state budget and when the state budget is reopened, counties watch closely to see what happens in Albany.”

LaVigne said state lawmakers are expected to reopen the budget before the end of this session, to cut spending.

“They closed a $15 billion deficit, expecting it would come in higher. Even with that, the balanced budget they enacted will be out of balance because of the reduction in revenues,” he said.

As has happened in the past, the state may try to reduce its costs by shifting costs to counties, LaVigne said. “Last year in March, [Gov. David] Paterson proposed an across-the-board 2 percent cut in state spending, requiring counties to pick up the cost. When they reopened the budget in August, they made more cuts, but they were not as dramatic for counties. We will be watching closely to see they don’t force costs onto counties to balance the budget should they reopen it.”

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