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Concern over sales tax receipts in Nassau

Nassau County Comptroller George Maragos is seen on

Nassau County Comptroller George Maragos is seen on Oct. 8, 2014. Credit: Howard Schnapp

Nassau's economy expanded during the first half of this year, but not as much as expected, county sales tax collections show.

Sales tax revenue increased by 1.4 percent for the first six months of this year compared with the same period last year, county officials reported Friday. However, Nassau had budgeted a 3 percent increase in year-over-year collections for 2015.

In Suffolk County, sales tax receipts for the first half of the year increased by only 0.65 percent, to $3.72 million, well below the 4.87 percent budgeted for this year. Legislative budget analysts warned that the county could face a shortfall of as much as $71 million if revenue does not improve.

Nassau Comptroller George Maragos said that if the current pace of collections continues, the county will face a $35 million deficit in sales tax revenue, which makes up 42 percent of the county budget.

"The slowing U.S. economy, weakness in consumer spending and the online shift in consumer purchasing patterns continue to negatively affect our sales tax receipts," Maragos said.

To date this year, Nassau has collected $488.5 million compared with $481.9 million last year.

Eric Naughton, deputy county executive for finance, called the $6.6 million increase in sales tax receipts "good news. We remain cautiously optimistic, and imposed spending restraints earlier in the year to address a potential $30 million shortfall," forecast earlier this year.

Robert Lipp, Suffolk's director of legislative budget review, said for the county to meet the budgeted 4.87 percent increase in sales taxes, the county would have to experience double-digit growth of 10.9 percent for the second half of the year.

"This is not a likely scenario," Lipp said.

To see even a 2 percent increase in revenue for 2015, sales tax revenue will need to grow by 3.05 percent, Lipp said. Even at that level of growth, the county would face a budget shortfall of $57.2 million.

Lipp said the sales tax figures are "contrary to some of the data and anecdotal evidence" of overall nice summer weather and reports of booming business in the Hamptons.

He said in three of the last four years, sales tax revenue has increased only 2.37 percent annually, except in 2013 when rebuilding after superstorm Sandy boosted sales tax revenue by 6.5 percent. Growth of 2.37 percent a year "may be the new norm," Lipp said.

He also said the county may be undergoing generational changes, with aging higher income baby boomers leaving the county and younger workers making lower salaries replacing them.

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