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Gov’ts see fall in tax intake
Cautious buying means less cash in county coffers
BY SARA FOSS Gazette Reporter

   Maybe people aren’t buying as many cars and other big-ticket items as they have in the past. Maybe high gas and food prices are forcing consumers to make difficult choices. Maybe it’s the housing slump.
   Whatever it is, sales tax revenues for this year are falling short of expectations, a troubling trend that points to a slowed economy and has counties throughout New York already worried about the budget process for next year.
   “Not in quite some time have I seen sales tax revenue fluctuate like this,” said Stephen Acquario, executive director of the New York State Association of Counties. “We’re trying to figure out what this is. Is it an anomaly? It’s going on all over the state, from Rockland to Chautauqua. ... It could be that people’s purchasing power is constrained due to factors beyond our control. We have to see how this trend continues.
   “Property taxes in New York are relatively stable,” Acquario said. “They’re pretty dependable, pretty reliable. County officials sensed immediately the impact of this.”
   Counties typically expect sales tax revenues to grow each year. But this year has been different, and next year likely will as well. Counties are projecting that their sales tax collections will remain flat or even decrease in 2008.
   The state’s economic forecast for next year also is grim, with a recent report on the state’s receipts and disbursements noting that “the state faces a period of economic uncertainty that has the potential to present challenges to state finances in 2008-09 and beyond.”
   The state has revised its sales tax projection for 2007-08, trimming it by about $17 million, and has also reduced its projection for 2008-09 by about $150 million, according to Matt Anderson, a spokesman for the New York state Division of the Budget. Sales tax revenues are still expected to increase next year, but not by as much as the state would like.
   Initially, “we projected [sales tax revenues] would grow about 5 percent, but that’s down to 3 percent,” Anderson said.
   “All signs indicate that we’re headed toward a difficult budget year,” Anderson said. The state expects to collect $11.5 billion next year in sales taxes; this year, it projected $11.2 billion in revenues.
PERPLEXING STATISTICS
   Some counties say they are a bit mystified by the slowdown in sales tax revenue because certain indicators, such as unemployment and tourism, suggest that the economy is strong.
   “The sales tax has been much more unruly this year,” said Saratoga County Administrator Dave Wickerham. “Certainly, it seems like the overall numbers are down, and it’s difficult to determine why. We’re still seeing a lot of growth. We’ve had a 10 percent increase in our tax base. Our population is growing. ... You can’t turn a corner without seeing a new subdivision or a new condominium. We know there’s a lot of activity, and that should result in more sales tax.”
   Wickerham said Saratoga County will come close to meeting its 2007 sales tax projection of $51.7 million, most likely ending up in the $50 million to $51 million range.
   “We’re relatively close, but the fact that we’re not seeing an increase is of some concern,” he said.
   Overall, the sales tax revenue accounts for about 22 percent of the Saratoga County budget.
   “If there’s a segment of our economy that’s not working, we need to know why,” he said.
   In Schenectady County, which this year has collected about $1 million less in sales taxes than last year, the 2008 budget projects sales tax revenues of around $83.87 million, a decrease from this year’s projection of around $85.01 million. Schenectady County Finance Commissioner George Davidson said that this year the county is actually down several million dollars in sales tax revenue when adjustments are made to account for the fact that the gas tax was lifted last year.
   “We normally anticipate growth,” Davidson said. “I don’t ever remember budgeting for less. In 2008, with everything that’s going on, there’s a question of what we can expect for growth.”
COUNTY OFFICIALS WARY
   The impact of the slowdown is difficult to gauge. Counties say that it’s too early to predict whether they’ll need to trim services or raise taxes next year and that for the most part, they are monitoring the situation and will respond accordingly.
   “Increasing property taxes is an absolute last resort,” Acquario said. “Counties are holding the line on appropriations into 2008 with negative projections.”
   He said he hoped the state would do so as well.
   “This ought to be a caution flag for the governor and for the Legislature,” he added.
   Wickerham echoed those sentiments.
   “We haven’t increased our property tax rate in a long time, and nobody is interested in doing it,” he said.
   Two-thirds of a county’s budget is statemandated, which means other programs — such as payments to nonprofits, quality of life programs and road projects — are more likely to be cut during an economic downturn, Acquario said. If the economic slowdown continues, county residents could suffer.
   In Albany County, the sales tax revenue will be down this year a little less than 1 percent from 2006. Officials expected to collect about $235.4 million this year but will likely take in about $226.3 million, according to John Rodat, commissioner of the Department of Management and Budget. Last year, Albany County collected about $228.3 million in sales tax revenue. Next year, the county budgeted for $232.3 million in sales tax revenue.
   “There’s no growth right now,” Rodat said.
NEGATIVE SIGNS
   But the trend didn’t exactly come as a shock to Albany County officials.
   “When we put together our 2007 budget, a little more than a year ago, we described the economy as fragile,” Rodat said. “Here’s how I described it. It’s like you’re living in southern California and you know there’s going to be an earthquake. You just don’t know when it’s coming. ... We came to the conclusion that the economy simply could not sustain what it was doing.”
   Rodat pointed to deficit spending, at both the federal and household level, as a reason for his pessimistic forecast and suggested that the subprime mortgage crisis triggered the downturn in collections.
   “At the most macroeconomic level, we have not been saving,” he said. “In fact, we’ve been taking on more and more debt to sustain our current consumption patterns, and you can’t go on doing that. Across the board, we’ve been spending more than we have.”
   As prices have risen and credit cards have been maxed out, people have cut back on discretionary expenses, he said.
   “Instead of getting a new washer or dryer, people are just struggling along,” he said.
   “We’ve already started discussing the 2009 budget; that’s how worried we are,” Rodat continued. “We believe it’s going to be very challenging.”
   But he said he thought it was premature to talk about cuts to county services, noting that there are other ways to save money. For instance, the state-mandated merger of Albany County’s two nursing homes will result in the reduction of 70 positions, which the county plans to trim through attrition.
IT’S ALL RELATIVE
   Some counties, particularly those in the Southern Tier and the Hudson Valley, have reported sales tax collections that are off by 40 percent. In comparison, the Capital Region is doing well.
   In Montgomery County, sales taxes have actually grown a little bit, according to County Treasurer Shawn Bowerman.
   “It’s been steadily growing for the past three or four years,” he said. “Compared to last year, [the growth] has flattened out.”
   Last year, the county collected about $14 million in sales tax revenue; this year, it will probably collect about $14.5 million.
   Bowerman said he didn’t know why Montgomery County’s sales tax revenue had remained fairly stable but suggested higher fuel prices might be a factor.
   “We have a number of truck stops and Thruway stops,” he said.
   Kajal Lahiri, a professor of economics at the University at Albany, said sales tax revenue will not increase next year but is also unlikely to decrease.
   “The worst picture is that the sales tax next year is flat,” he said. “The economy is not going to take off next year, that’s for sure. We haven’t seen the worst yet.”
   Yet Lahiri, who serves as an economic adviser for Albany County and New York state, also predicted that things would improve by the end of next year and that talk of a recession was overblown.
   “We could be mildly surprised by the end of next year,” he said. Certain sectors of the economy, such as manufacturing, are doing well, while unemployment is fairly low and inflation manageable, he noted.
   “It’s a checkered picture,” Lahiri said. “What’s hurting us as consumers is the high gas prices.”  

  
  
  

This county and state doesn't get the big picture, if residents don't have the extra money because they're paying more for taxes and gas the only way they have the money to pay their bills is to cut back on what they buy. It's economics 101, you can't spend what you can't afford and if you do you'll go bankrupt.

Quoted from Shadow

This county and state doesn't get the big picture, if residents don't have the extra money because they're paying more for taxes and gas the only way they have the money to pay their bills is to cut back on what they buy. It's economics 101, you can't spend what you can't afford and if you do you'll go bankrupt.

The State and County knows very well where our $$ is going and if they dont get the monkey off our backs we will just sink.....leeches all over....Just look at NYRA-bankrupt and the State is STILL contemplating who gets that control.....

And that is what our government does....They continue to throw money at a problem without ever fixing it. They throw good money to bad!

Quoted Text

“We normally anticipate growth,” Davidson said. “I don’t ever remember budgeting for less. In 2008, with everything that’s going on, there’s a question of what we can expect for growth.”

This statement exemplifies government mentality.

Our elected "leaders" continue to tax and spend.  When the tax revenues increase, there is no consideration given to paying off the deficit/debt, returning (real) money to the taxpayers, or placing surplus in a reserve (rainy day) fund.  Our "representatives" don't have a contingency plan to address decreased revenues during downturns in the economy.

The Gazette article quotes politicians who are discussing the possibility/likelihood of tax increases to fund spending.  I suggest that it's time to slash spending.  Fiscal restraint and responsibility are absent from government.

On a related note, the decrease in sales tax revenues will/should also have an impact to the Schenectady Metroplex Development Authority.  Are future "investments" of public revenues being reviewed to avoid deficit spending?  If not, will there be another increase in the county sales tax rate forthcoming?

They should be demanding $$ back from our 'Shadow government'......they know who they are.....

MR.BRUNO
MR.SPITZER
MR.SILVER
MR.TEDISCO
MR.AMEDORE
MS.CLINTON

AND THE REST OF THE GUMBAS.....