County $1.4 million behind last January

Updated: 03/17/09 07:48 AM
By Matthew Spina, News Staff Reporter

Erie County’s sales tax income — which buttresses towns, cities and school districts, as well as County Hall operations — fell by 5 percent in January as the government began its new budget year.

The month’s sales tax proceeds for county government alone fell by $1.4 million, or 5 percent, when compared with January 2008, County Comptroller Mark C. Poloncarz said.

February’s final totals are not yet known. But receipts from the large retailers that electronically transfer the sales taxes they collect are down by 4.8 percent, the comptroller’s office said.

Erie County levies the state’s highest sales tax — 4.75 percent atop the state’s 4 percent. Erie then shares the hundreds of millions of dollars generated by 3 of its sales tax pennies with its cities, towns, villages and public schools according to a population-based formula created in 1977. The county distributes an additional $12.5 million under a deal sealed in 2006.

So the county’s municipalities and school districts will see their shares decline, compared with the previous year, when they receive their first-quarter sales tax distributions in April, the comptroller’s office said.

For this year’s county budget, County Executive Chris Collins anticipated no growth in sales tax income over 2008. But the comptroller’s accountants figure that the government would go without $19.4 million if the 5 percent drop continues throughout the year.

The county executive’s staff is reportedly considering a similar scenario. But the county has a cushion. The federal government is expected to send $74 million to Erie County over the next two years as it helps counties pay their share of their Medicaid programs.

Further, the county ended its last budget year with a projected surplus of about $10 million, which would bring the county’s reserve fund to $57 million, assuming that outside auditors eventually confirm the year-end results.

School districts are expecting federal economic-stimulus money, too, to make up for cuts in state aid. Towns, villages and cities are employing various strategies to adjust for the recession.

No one interviewed seemed surprised Monday that sales tax income fell at the start of the year. Local officials knew that the sales tax bonanza delivered in 2007 and early 2008 — by Canadian shoppers and $4-a-gallon gasoline — would be fleeting.

“If you looked at it, you had to realize it wasn’t going to last,” said Cheektowaga Supervisor Mary F. Holtz, whose town got more than $8 million from the sales tax last year. “We use conservative budgeting here,” she said of her town’s sales tax estimate. “We actually budgeted for 12 percent less than last year.”

The Town of Hamburg’s budget anticipates an increase in sales tax funds of 3 percent this year, but the town can conserve funds by delaying optional projects until the impact of the recession is clearer, Supervisor Steven J. Walters said.

For example, a project to install GPS location devices on town vehicles is being put off, saving $50,000, he said.

“January and February are a little too early to panic on this,” Walters said.

Amherst Comptroller Darlene A. Carroll said higher-than-expected revenues from mortgage taxes could offset the anticipated decreases in sales tax revenues.

“From what I heard from the banks, they are having a banner year in refinancing because the rates are so low,” Carroll said, “so I’m hopeful that any shortfalls we might have in the sales tax might be offset by increases in the mortgage tax.”

Collins and his budget staff are creating a new four-year plan that will signal how they intend to use the $74 million, while also assuring the state-appointed financial control board that they can balance budgets through 2012. Collins wants the so-called hard control board to then retreat to advisory status.

The Legislature has asked Collins to indicate his intent for the $74 million and any other federal stimulus funds the county could get. Lawmakers vented at a meeting of their Finance and Management Committee Monday when no high-ranking member of the administration arrived to explain the administration’s plans.

“To not have the budget director here, to not have the deputy county executive here, this is a pattern,” said Legislator Thomas A. Loughran, D-Amherst. “It is unacceptable.”

Collins legislative liaison Bryan Fiume repeatedly told lawmakers that the administration has not reached a clear strategy because of uncertainty on how federal stimulus money will flow from Albany.

News Staff Reporters Harold McNeil, Barbara O’Brien and Fred O. Williams contributed to this report.