Suffolk County is expected to face a cumulative budget shortfall of up to $1.5 billion over three years because of the economic fallout from the coronavirus pandemic, according to a new report.
The county’s COVID-19 Fiscal Impact Task Force projected Suffolk will lose between $469 million and $590 million in revenues this year and face a total deficit of between $1.1 and $1.5 billion through 2022, according to a report obtained by Newsday on Monday.
This year’s outlook alone “demands a swift and dramatic response to prevent an economic disaster,” the report said. The shortfall will place “enormous pressure” on the county’s ability to “maintain an acceptable level of government service.”
The report continued: “Strong, unprecedented and inevitably painful steps will have to be taken to mitigate the spread of the virus and to cope with the economic dislocation in its wake.”
The projections are based on expectations that economic recovery will be slower than after the 2008 recession, task force coordinator Leonard Zinnanti said.
Suffolk County Executive Steve Bellone called the report’s findings “stunning,” and said officials will have to discuss measures including possible cuts in county services to close the budget gap.
“I knew that the budgetary impacts of this virus would be significant, but this is beyond what I expected and I think it’s far beyond what we faced after the global financial crisis in 2008,” Bellone, a Democrat, said in an interview Monday.
The task force of four finance experts was assembled by Bellone in April and made projections based on the economic lockdown ending June 30.
Members examined three scenarios:
- No other coronavirus outbreaks occur this year.
- A second outbreak in the fall causes renewed social distancing restrictions but no official economic shutdown.
- A second shutdown in the fall is imposed, and lasts through the end of the year.
The task force examined the coronavirus's expected impact only on revenues, not expenditures, the report said.
Sales tax, the county’s main source of revenue, is expected to fall by $329 million this year even if there is no second wave of the virus, the report said. The county, with an annual budget of $3.2 billion, typically collects about $1.5 billion in sales tax a year.
County property tax collections are expected to drop by 4.9% this year, or about $35 million, as more property owners are unemployed and using mortgage forbearance programs, the report said.
Other sources of county revenue are expected to drop by $99 million this year A loss of $30 million is expected from the closure of hotels, motels, Jake’s 58 Hotel & Casino and Suffolk Off-Track Betting Corp. sites, the report said.
Eric Naughton, Bellone’s budget director, said the budget gap is “too extreme” to close without direct federal aid.
“Clearly without federal stimulus, there’s no other way to get out of this hole,” Naughton said.
A bill passed by the Democratic U.S. House of Representatives last month would provide $1 trillion in aid for state and local governments, but Senate Republicans and the White House have put the measure on pause.
Projections last month by the county legislature’s Budget Review Office of a shortfall of between $300 and $350 million for 2020 prompted concern about how the county would fund $37 million in biweekly payroll and more than $410 million in debt payments this year.
"I am gravely concerned for our ability to remain intact and functional as a county," said Suffolk comptroller John Kennedy, a Republican.