Sales tax collections in Suffolk and Nassau counties jumped in the first half of 2017 compared with the same period last year, offering a bright spot as the counties struggle with budget deficits, county officials said Tuesday.
Suffolk’s sales tax revenues through June 30 climbed by 4.16 percent, while Nassau’s increased by 2.6 percent.
Budget analysts for both counties projected that even if collections are flat in the second half of the year, sales tax revenues would be better than budgeted.
“For a change, the news is good,” Suffolk Budget Review Office Director Robert Lipp wrote in an email to county lawmakers about the sales tax news.
The Suffolk Legislature’s Budget and Finance Committee Chairman Lou D’Amaro (D-North Babylon) said the increase suggests an improving economy.
But he warned that the county will still have to look at “meaningful reductions” in its 2018 spending plan, which will be debated in the fall.
Suffolk faces a $160 million deficit without counting one-time budget measures such as borrowing. A Wall Street ratings firm downgraded the county’s bonds by a step in June.
Lipp told the committee Tuesday, “We have a festering deficit.”
Nassau County Comptroller George Maragos said sales tax revenues “continue to exceed overall economic growth apparently stemming from high consumer confidence. The shift to online sales is not eroding the sales tax base as rapidly as it had been anticipated.”
Maragos is a Democratic candidate for Nassau County executive.
A memo from Nassau’s Office of Legislative Budget Review attributed the increase in sales collections to job growth, improving confidence in the regional economy and a strong housing market. The Nassau Interim Finance Authority has estimated the county’s budget deficit this year at more than $100 million, not counting borrowing and other one-time budget measures.
Martin Cantor, director at the Long Island Center for Socio-Economic Policy, a Melville-based think tank, warned against overconfidence.
While growth in employment and housing likely contributed to the sales tax numbers, he called Suffolk’s increase “a little bit of a blip . . . When you consider the cost of health care, energy and property taxes, a large amount of money comes out of the economy.”
Suffolk County Executive Steve Bellone’s spokesman Jason Elan said while the uptick is a positive sign, “it is also clear that we must take bold action to address the financial challenges we face moving forward.”
Suffolk County Comptroller John M. Kennedy said he was “guarded as to whether or not this is truly an as-the-board uptick in consumer consumption and spending.”
With Celeste Hadrick