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Suffolk expects $25-million shortfall in sales tax

In the latest dose of fiscal bad news, Suffolk financial aides said Tuesday that the county will likely end 2009 with a $25-million shortfall in sales tax, while legislative budget analysts warned of a potential $66-million cumulative sales tax gap by the end of 2010.

An aide to County Executive Steve Levy also testified before the legislature's budget committee that cuts in Gov. David A. Paterson's proposed state budget could cost the county at least $5 million, if enacted.

The latest disclosures caused Levy late Friday to issue an executive order directing all departments to prepare to set aside as much as 10 percent of their discretionary costs - a move that saved $40 million last year. Suffolk County has a $2.4-billion budget for 2010.

"The numbers are very volatile," said Levy, adding he wanted to take steps early to give the county flexibility. Presiding Officer William Lindsay (D-Holbrook), told budget committee members the budget is so tight no one should be thinking of proposing midyear amendments for new initiatives. "There is no money," he said.

Although there are two more 2009 sales tax checks due next month, Levy aide Alan Kovesdy said the county, which had projected a 6 percent drop in 2009 sales tax, will likely see a steeper 8.2 to 8.4 percent sales tax decline.

In Nassau, this year's budget projected a 6 percent decline in sales tax for 2009 and Steve Antonio, director of the legislature's office of budget review, now expects the decline will be 7.5 percent. The cutting of the 2.5 percent home heating tax June 1, he added, could also lead to a $36-million budget hole in 2010 even if sales tax grows 1.75 percent as budgeted.

But Gail Vizzini, the Suffolk legislature's top budget analyst, warned her office expects only a 2.75 percent growth in sales tax in 2010, though the adopted budget projects 4 percent growth. That means the county could face a 2009-2010 sales tax shortfall of $66 million.

Lindsay defended the 4 percent growth forecast in the budget, saying lawmakers split the difference between their analysts' and Levy's 5 percent sales tax growth estimate.

If the shortfall materializes, Suffolk will have to either cut expenses or services or increase revenues.

Were the gap made up by property tax alone, the $26 million shortfall could mean a $47 increase for the average homeowner; the two year $66 million shortfall could mean as much as $119 hike for the average homeowner.With Celeste Hadrick

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