Suffolk County sales tax revenue falls short of projections
The Suffolk County seal at the H. Lee Dennison Building in Hauppauge. Credit: Newsday/Karen Wiles Stabile
Suffolk County sales tax collections in 2023 were up over the previous year but came in less than projected, a key economic indicator signaling pandemic-era growth has slowed.
Sales tax revenue fell $13.5 million short of projections in the county's 2023 operating budget, according to a memo presented to county legislators last month. The county brought in $1.93 billion in revenue in 2023, up from $1.91 billion in 2022, accounting for more than half of Suffolk’s $3.9 billion budget.
Suffolk sales tax collections grew just 1.3% in 2023, less than the 2.4% statewide average for counties and cities outside of New York City, according to a February state comptroller’s office report.
Nassau sales tax collections increased 2.3% in 2023, from $1.53 billion to $1.57 billion, according to state figures. Nassau was more conservative in its budgeting, resulting in a $57.4 million surplus, according to a memo to county legislators from Maurice Chalmers, director of the county office of legislative budget review.
Still, budget officials caution lawmakers should remain conservative when budgeting. National retail sales fell 0.8% in January, which was worse than the 0.3% projected decline, the Nassau memo notes.
“This continued level of growth may be nearing its end,” the memo reads.
Both counties saw dramatic sales tax collection increases at the height of the pandemic. Suffolk experienced a 21% increase from 2020 to 2021 and a 5.5% increase from 2021 to 2022, according to the state. Nassau sales tax collections rose 20.4% from 2020 to 2021 and 7.2% from 2021 to 2022.
“The fluctuations in sales tax collections that characterized the pandemic period have subsided,” state Comptroller Thomas DiNapoli said in a statement. “Local officials should plan for sales tax revenue with more stable and modest growth rates.”
Suffolk has an estimated $1 billion in various reserve funds, due in part to previous higher than anticipated sales tax revenue and the infusion of about $500 million in federal pandemic aid.
That previous sales tax growth was due largely to pandemic-era inflation, which reached a high of 9% in summer 2022, and federal aid, according to Martin Cantor, director of the Long Island Center for Socio-Economic Policy.
The shortfall is small and does not indicate structural problems in Suffolk’s budget, he said.
“With the county's near billion reserves, the $13 million is a rounding error,” Cantor said.
The Suffolk County Legislature’s Budget Review Office projects another $19 million sales tax deficit for 2024.
The shortfall, however, could be mitigated if 2023 spending totals are less than anticipated and if future sales tax revenue is greater than projected. The Budget Review Office also notes the county has ample reserves, with a $158 million surplus in the general fund to cover the deficit.
“While it's not great news to come in less than estimated, we don't think that it's something to panic over,” Budget Review Office assistant director Benny Pernice told legislators during the Feb. 27 Budget and Finance Committee meeting. “There are plenty of avenues to mitigate that.”
Pernice also noted that the Budget Review Office recommended the legislature decrease the projected sales tax numbers in former County Executive Steve Bellone’s budget, but lawmakers declined to do so.
“The county executive’s projection was perfectly reasonable; it’s just our numbers took us a little short of that,” Pernice said.
Budget committee chairman Legis. Steve Flotteron (R-Brightwaters) said the sales tax collection number underscores the need for conservative budgeting and a healthy reserve fund to settle legal claims.
"Because of debt and inflation, people have less disposable income," Flotteron said. "And that means there'll be less sales tax for everyone."
Vera Chinese covers Suffolk County government and politics. She joined Newsday in 2017 after working as an editor for the East End lifestyle publication northforker and a general assignment reporter for the New York Daily News.
