Sales taxes revenues grew by 1.7 percent across Long Island in the first half of this year compared to the same period last year, leading to a likely surplus in Nassau while widening a projected budget gap in Suffolk.
In Nassau, the growth in collections is running ahead of the county’s budgeted annual forecast of a 1.26 percent increase. The county will end the year with a $4.7 million surplus in sales taxes if the current pace continues, County Comptroller George Maragos said in a news release.
“We are pleased that sales tax receipts are higher than budgeted and we expect to meet and exceed our projections based on the positive economic [real estate] activity occurring in the county,” said Eric Naughton, Nassau’s deputy county executive for finance.
In Suffolk, however, collections are less than half the 3.55 percent increase included in the county’s 2016 budget.
“Unemployment is down, job creation is up and we don’t know what is creating this anomaly,” said Connie Corso, Suffolk budget director. “In a typical year, if people were saving money, they would be spending 80 percent of the disposable income, but we’re only seeing 20 percent.”
Suffolk fiscal officials in May lowered projections of sales tax growth for this year to just 2.7 percent, in estimating a $186 million three-year shortfall, heading into the 2017 operating budget.
Corso said the latest sales tax numbers now indicate that county sales tax will only grow by 1.5 percent this year, creating an additional $26.3 million budget hole in Suffolk’s $2.9 billion budget.
Corso said the county budget office has already set aside $10 million in savings from this year’s budget and is asking departments to report back by week’s end on additional steps that can be taken to achieve savings, but so far, they have not imposed any specific savings targets. She said that one of the steps under consideration is cutting back on purchases of office supplies and requiring approval for any spending over $250. The previous limit had been $1,000.
Legis. Kevin McCaffrey, leader of the GOP caucus, said, “None of us are surprised that sales tax revenues are down. We thought the revenues were rosy optimistic when included in the budget based on the history over the last several years. Hopefully, this will be a wake-up call for some of my colleagues who keep spending as if there was a sales tax increase and not an decrease.”
In Nassau, county officials had hoped for a more robust increase in sales taxes this year after collections for the first quarter of this year grew 5 percent. Maurice Chalmers, director of the county legislature’s budget review office, said economic forecasts predict the U.S. growth rate will average 1.8 percent this year, which would put the county on track to reach its sales tax budget.