Sales tax growth tepid in local counties
Only Schoharie, Saratoga counties see sizeable gains
CAPITAL REGION Most Capital Region counties saw little growth in their third-quarter sales tax revenue compared with a year ago, suggesting the local economy continues to trudge slowly out of the recession, according to state data.
The bright spots were Saratoga and Schoharie counties, which saw 6.2 percent and 12.3 percent increases, respectively, compared with the same three-month period a year ago. Still, Capital Region counties are well below their totals in 2008, before the recession, according to local officials.
The state as a whole collected $2.9 billion in sales tax for the third quarter this year versus $2.8 billion a year ago, according to data from the state Department of Taxation and Finance.
Saratoga’s increase is likely due to a strong tourism season, including track season, and the presence of GlobalFoundries, a computer chip manufacturer, said County Administrator Spencer Hellwig. “We attribute a lot of it to consumer confidence. People are starting to spend money,” he said.
GlobalFoundries’ presence in the county means people are buying houses and appliances to furnish them, Hellwig said. “A lot of people are working there and there is still construction there. This is generating sales tax,” he said. “It is not a handful of people but thousands.”
Todd Shimkus, president of the Saratoga County Chamber of Commerce, said motel/hotel room occupancy was high during the summer, as was revenue per available room, a metric that measures how much people spend on rooms, meals and activities. “This was up double digits compared to a year ago,” he said.
The county is also seeing strong construction growth, which includes materials and gasoline sales. “Typically, people focus on the impact of sales tax from retail and restaurants. We are seeing a rebound in housing and construction building in this county. When people are building new homes and offices, they are buying furniture and appliances for them,” Shimkus said.
Schoharie’s increase is due to people continuing to rebuild their lives after tropical storms Lee and Irene flooded the community last year, said Bill Cherry, county treasurer. “The [12.3 percent] growth is very good news; it exceeds projections,” he said.
Unfortunately, the growth is not due to new businesses coming to the area, which would create a recurring sales tax revenue stream, Cherry said. “I can’t say it is the vibrant economic health of the county. It is due to rebuilding. The only event of significant factor is that many people lost their homes, appliances and cars in the flooding. I would suspect an increase of replacement of these lost items” as the cause for the sales tax increase, he said.
Schoharie had projected to collect $13.5 million in sales tax for the year, but will likely take in $15.3 million, Cherry said. “This is really good news for Schoharie County taxpayers. In the projected budget for 2013, we are able to hold the line on [property] taxes because of increased sales tax,” he said.
Rebecca Flach, spokeswoman for the Retail Council of New York State, said the sales tax growth shows the state’s economy continues its slow recovery. “It is a slow, steady growth,” she said.
“We would all like it to be better, but this is expected, given what the state and the country went through [the] last three to four years. It is indicative of the bumpy road we expected in the recovery,” Flach said.
On the plus side, she said, a Retail Council survey of businesses in the state shows that merchants are optimistic about seeing strong sales in the fourth quarter. The fourth quarter includes back-to-school sales and holiday shopping events.
Flach said high unemployment rates and the growing cost of food and fuel remain as factors affecting consumer confidence. “As long as unemployment continues to remain high, people will save versus spend,” she said.
Several local county officials said their sales tax figures came in as expected and that they expect to stay within their budgeted projections. Some, however, had hoped for higher figures due to tourism because of the early arrival of warm weather in the region this spring.
Counties do not learn of their fourth-quarter distributions until after the first of the year, however, and use third-quarter distributions to determine whether they are on track with projections, local officials said.
“I thought we were going to be healthier than that because of the great summer we had. We had a super summer and I thought the numbers would reflect that,” said E. Terry Blodgett, Fulton County treasurer.
Fulton County’s third-quarter distribution was nearly equal to the same period a year ago: $4.63 million versus $4.62 million.
Fulton County Budget Director Alice Kuntzsch called the local sales tax figures “bad news.” She said, “We are way behind where we were five years ago when the recession hit. We were hoping for some growth to try to get back to where we were in 2008 when we collected $18 million in sales tax receipts.”
The county expects to collect $16.8 million in sales tax for this year, the budgeted amount.
Montgomery County Treasurer Shawn Bowerman said he expected the local third-quarter totals to level out after seeing strong earlier quarter distributions.
“Last year, the third quarter was our largest. This year, the second quarter was our best. I expect the fourth quarter will be close to third quarter,” he said.
Montgomery County has budgeted $24.7 million in sales tax for the year, but will likely collect $25.5 million, Bowerman said. Next year, he has budgeted $26 million for sales tax revenue.
Counties could use the extra sales tax revenue, according to the New York State Association of Counties. NYSAC said county leaders are looking at multibillion-dollar budget deficits next year caused by state-mandated programs. “Based on current trends, county expenditures will continue to outpace revenues unless there is continued and meaningful mandate relief provided by the state,” association President Edward A. Diana of Orange County said in a news release.
In 2013, counties will see their costs for nine state-mandated programs grow by $244 million. Meanwhile, they will only be able to raise their tax levies $114 million under a cap imposed by state law. This leaves a gap of $130 million, according to NYSAC, without even factoring in the general cost of inflation, salaries, health insurance, fuel and the other responsibilities of county governments.
“We haven’t seen this type of fiscal shortfall in our lifetimes. This deficit is forcing counties to make incredibly difficult decisions. Local leaders are draining down their reserves and gutting local programs to balance their 2013 budgets,” Diana said. “Very soon there will be nothing left to cut. At the same time, our costs are preprogrammed by the state and will automatically rise.”
NYSAC Executive Director Stephen J. Acquario said state leaders need to work collaboratively to enact mandate relief; otherwise, “essential local programs and services will be sacrificed.”