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Nassau sales tax collections down nearly 15 percent

Jon Kaiman at a Nassau Interim Finance Authority

Jon Kaiman at a Nassau Interim Finance Authority (NIFA) meeting in Uniondale on Oct. 9, 2013. Photo Credit: Newsday / John Paraskevas

Nassau County's sales tax revenue declined by 14.8 percent for the first three months of this year, the largest drop in collections since the economic collapse of 2008, according to county finance officials.

Suffolk's sales tax receipts also dropped, but by far less than in Nassau, declining 1.7 percent, county officials said.

Nassau collected $35.3 million less in sales taxes this year compared with the same period last year, even as county officials are counting on higher-than-budgeted sales tax revenue to help pay the cost of amended union contracts that moved toward ending a three-year wage freeze for much of the workforce. Those agreements were approved by the Republican-controlled county legislature Monday.

Suffolk sales tax revenue was $4.2 million lower than expected, officials said.

Nassau's labor deals still must be approved by the county's financial control board, the Nassau Interim Finance Authority.

NIFA chairman Jon Kaiman said the drop in revenue "is a limited view out of a large window. We will look to see what kind of realistic expectations can be surmised in relation to the months and years ahead."

However, Nassau Comptroller George Maragos warned Friday that the sales tax decline may signal "longer term trends that are beginning to surface: the nearly flat income growth and the accelerating shift to Internet retailing."

Maragos said Nassau County Executive Edward Mangano would be "well advised" to reduce the 2 percent increase in sales tax budgeted this year to a net decline of 4 percent -- a $70 million drop in revenue. Maragos said collections would have to increase by 6.5 percent for the remainder of this year to reach the budgeted total of $1.162 billion.

Mangano's office did not respond to requests for comment.

NIFA has estimated the cost of the labor deals at $129 million. The legislature's budget review office reported that four of five union deals could cost from $120 million to $292 million, depending on when current employees retire and new employees are hired.

Mangano and labor leaders say the deals, which call for new employees to pay a percentage of their health insurance and pension costs, will save hundreds of millions of dollars in the long run.

In Suffolk, Deputy County Executive Jon Schneider said Moody's Analytics, which does Suffolk's sales tax forecasts, advised that no change is needed at this time in the county's budgeted sales tax growth of 3 percent. To meet budget, sales tax would have to increase by 4.9 percent for the rest of this year, he said.

Officials in both counties blame the harsh winter for the decline in sales tax revenue; Nassau also cites a falloff in superstorm Sandy spending that boosted sales tax proceeds last year.

"We're hoping as the weather improves folks will get out and shop," Schneider said. "In all fairness, the county executive did tell people to stay home while plows were on the road and to that extent, we'll take some of the blame."

The only time in more than a decade that sales taxes declined year over year in Nassau was in the aftermath of the 2008 stock market collapse. Revenue dropped by $8.85 million in 2008 and $73.6 million in 2009, according to the county records.

Frank Moroney, spokesman for Nassau Presiding Officer Norma Gonsalves (R-East Meadow), said the sales tax numbers "are lower than anticipated" and will "have to be closely watched."

Legislative Minority Leader Kevan Abrahams (D-Freeport) said it "looks like the post-Sandy sales tax boost which propped up Mangano's shaky budgets for two years has ended. He needs to now balance the budget by actually managing in a responsible way."

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