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Bellone hires 2 consultants for sales tax projections

Suffolk County Executive Steve Bellone looks on during

Suffolk County Executive Steve Bellone looks on during a news conference in Smithtown, Friday, May 13, 2016. Credit: Barry Sloan

Burned by last year’s sales tax projections, Suffolk County Executive Steve Bellone last week took the unusual step of hiring not one, but two consultants to forecast the county’s sales tax growth for the coming year.

What makes the move unusual is that it comes only weeks before the unveiling of the proposed 2017 county budget, and the dueling consultants, hired Wednesday, will have only until Sept. 7 to report findings on the future projections for Suffolk’s nearly $1.4 billion in sales tax, which at 37 percent is the largest single source of Suffolk tax revenues.

Beyond the short time frame, what made the solicitation for bids unusual was that the consultants are not only to make their own forecast, but also “run a sensitivity analysis on your model to determine what changes in assumptions would be needed in order for the county executive’s recommended amounts to be consistent with your model.”

“It’s called opinion shopping,” said Paul Sabatino, former chief deputy county executive and a veteran of decades of budget wars. “They are asking for as many bidders as possible until they get one who will give them the number they want. When you declare five straight years of fiscal emergency and you run out of gimmicks, you resort to cooking the books.”

Vanessa Baird-Streeter, Bellone’s spokeswoman, acknowledged bids went out late on Aug. 17, but it was only because the contract with Moody Analytics, which has made $157,000 in county fees since 2013, ran out earlier this month.

She said the county only got two responses. Moody’s, which has continued to work with the county for much of the year, will receive $19,700 for its forecast. She added budget officials wanted to “open it up” to get another view, selecting New York City-based Urbanomics, which will get $15,000.

She also said the new specification is not unusual even though no similar language appeared in earlier Moody’s contracts. “The sensitivity analysis takes into account a number of variables that will affect the county’s budget office’s recommended operating budget,” said Baird-Streeter.

The competing projections are being sought after the county last year fell $68 million short in sales tax in 2015, according to outside auditors. So far this year’s sales tax growth is less than 1 percent; the 2016 budget projected a 3.55 percent increase. Experts cite lower gas prices, internet sales and a robust cash economy that skirts sales tax laws.

“It’s a complete waste of money to pay outside firms when we know that sales tax growth is going to [be] virtually zero because it’s the new reality,” said Legis. Tom Cilmi (R-Bay Shore).

Comptroller John Kennedy, a Republican, said Bellone so far has failed to deal realistically with fiscal woes. “Nine months into the budget year, you can’t close a $178 million gap by deferring purchase of Post-its,” said Kennedy, citing recent Bellone steps to economize in light of a new midyear $26 million sales tax hole. “I hope the county executive is astute enough to demand a realistic sales tax number. If they conjured up an imagined figure . . . it will only lead us further down a hole from which we will never climb out.”

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