Counties warned over use of sales tax projections State comptroller's office says they rely too heavily on those revenues and should be more conservative
By KENNETH C. CROWE II, Staff writer First published: Tuesday, July 15, 2008
ALBANY -- The state's counties are vulnerable to a recession due to relying too much on sales tax revenues and should project those revenues conservatively, according to a state comptroller's office report issued Monday. Capital Region counties said they've always been conservative in sales tax projections and are hurt by the state passing along mandated costs such as Medicaid, the use of which will increase in a slow economy.
"Sales tax revenues are economically sensitive," State Comptroller Thomas P. DiNapoli said in a statement accompanying the report.
"The economic downturn will likely have a significant impact on sales tax revenues. Counties -- especially those that rely heavily on the sales tax -- should forecast revenues conservatively," DiNapoli said.
Rensselaer County Executive Kathleen Jimino said the state will be to blame for any fiscal problems the counties encounter.
"I would suggest it's the state passing its bills on to the county making us vulnerable to the economic downturn," Jimino said.
"If we would rely less on sales tax that would only mean we would have to collect more in property tax," Jimino said.
Medicaid, temporary assistance, rent assistance and help with heating bills will increase demands placed on counties, Jimino said.
"We can't be more any more cautious in our use of sales tax without exasperating property tax problems," she emphasized.
Sales tax receipts have always been factored in when Albany County operating budgets have been formulated. For this year, they were projected at $139.3 million, up 1.9 percent from 2007.
County Executive Mike Breslin "is always concerned about sales tax revenue as it comes in, and this year in particular he's more cautious because of the poor economy," county spokeswoman Kerri Battle said. "Albany County is going to have to take a critical look at all components of the budget for 2009 because of the economy and the cuts in state aide."
Schenectady County Legislature Chairwoman Susan Savage said her county already budgeted conservatively for this year, projecting that sales tax revenue would not change from 2007 to 2008.
But county officials were pleasantly surprised to find that sales tax revenue went up 10 percent from this January to April. But that was due to a miscalculation that initially showed an $800,000 decrease in revenues during the first part of 2007. That money was later restored to the budget. Still, this year's numbers are higher than expected, officials said.
Savage said it's the county's $30 million cost for Medicaid that poses the most significant challenge rather than worries about the economy's impact on sales tax.
The Capital Region's counties have seen an increase in their sales tax collections for the first four months of 2008, compared with the same period in 2007. This is due in part to higher revenues resulting from the increase in gasoline prices. Every time gasoline prices rise at the pump, the state and the counties see their sales tax income go up.
Saratoga County Administrator David Wickerham said, "Sales tax revenue is important, but we only charge 3 percent here. The real emphasis is on the spending side, where the board has taken a strong stand; it's why we're in the good position we're in because we spend less than anyone else."
The state comptroller's report advised that sales tax may not be affected yet by the economic downturn due to some counties increasing their sales tax rates; an expansion in the sales tax base; border counties benefiting from Canadian shoppers; and higher gasoline prices. Higher energy costs, the reports said, could led to less spending on automobiles and other durable goods, which contribute to county sales tax income.
Staff writers Lauren Stanforth and Leigh Hornbeck and Carol DeMare contributed to this report.
Sales tax growth
New York's counties rely too much on sales tax revenue, according to state Comptroller Thomas DiNapoli. Counties in the greater Capital Region had growth in sales taxes from 2007 to 2008. Dollar figures are in millions.
County // Jan.-Apr. '07 // Jan-Apr. '08 // Percent chg
Yes, and all I'm saying reciting is what most Democrats on the national stage state as their case for running for office. Raise taxes and things will get better.
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