Counties overestimate sales tax revenue

Sales taxes collected by Suffolk and Nassau counties increased by a smaller rate than anticipated during the first six months of the year, raising the prospect that the governments, already facing tough cuts in next year's budgets, will have to slash spending later this year.

Suffolk County collected $508.4 million in the first six months of this year -- 2.4 percent more than the same period last year, but lagging the 4 percent growth it had anticipated for the entire year.

Similarly Nassau County saw sales tax receipts go up 2.1 percent, reflecting a slower economic recovery than the 3 percent increase it had anticipated for the entire year. The $449.6 million collected doesn't include the county's residential energy tax revenue.

The sales tax rate for Nassau and Suffolk is 8.625 percent with 4 percent going to New York State.

Officials were mixed in their reaction to the new numbers. Suffolk County Deputy Executive Eric Naughton was cautiously optimistic sales would still pick up, particularly as summer vacationers flock to the East End.

Suffolk Presiding Officer William Lindsay (D-Holbrook) said, "What I've learned over the years is that sales tax numbers jump up and down from month to month. I generally wait until well into the third quarter before I try to make any accurate predictions."

Nassau Comptroller George Maragos declined to make projections. He said if the current trend continues for the rest of the year, the county would end up with a $10-million budget hole.

Pearl Kamer, chief economist of the Long Island Association, a business group, said, "Consumers are being cautious and only buying what they need because they're concerned about losing their jobs. I don't see any uptick in consumer spending."

Naughton said every 1 percent below the expected amount in sales tax collections would open an $11-million hole in the Suffolk budget. The growth in Nassau sales taxes is far less than last year, when the county collected $1 billion, 6.7 percent higher than in 2009.