Erie County Comptroller Mark C. Poloncarz today released new data regarding sales tax proceeds received by Erie County (“County”) for the first quarter 2009 from the New York State Department of Taxation and Finance (“State”).

Cumulative sales tax receipts for the County in 2009 continue to decline compared to 2008. For the February-April 2009 cash distribution quarter, the County’s 2009 sales tax receipts are down 2.75% compared to 2008. According to the State, when compared to other counties across the state, the County’s decline in sales tax receipts is among the lowest. For instance, Monroe County has experienced a 10% reduction in sales tax receipts for the first quarter 2009 compared to 2008.

“Erie County disproportionately relies on sales taxes as its major revenue source for our budget. When the economy suffers, consumer confidence drops and consumers spend less, the County receives less revenue to use to sustain operations,” said Poloncarz.

He added, “I have been warning about this over-reliance since September 2007. If this reduction continued for the entire year, combined with new state-imposed costs on counties, Erie County would be facing a very difficult budgetary hole to close. However, the County’s receipt of the federal government’s Medicaid stimulus assistance will in all likelihood help close the budgetary gaps created by this reduction in sales tax proceeds. This federal assistance will not last forever, and in future years the County’s administration and legislature must learn to wean itself off of sales tax as the County’s primary revenue source and budget accordingly.”

January and February 2009 sales tax data demonstrated significant reductions compared to 2008. Since September 2008, Poloncarz has been warning the County Executive and County Legislature about declining sales tax revenues and urged both entities to budget conservatively on sales tax in 2009. The County Administration recently stated that it is developing a revised Four Year Financial Plan which will decrease sales tax revenue estimates for 2009 and 2010-2012, including reducing the 2009 estimate by approximately $20 million. Because the 2009 County Budget includes no sales tax growth compared to 2008, any year-to-year reduction creates a potential negative gap in the County’s 2009 Budget.

The County has recently received two (2) cash receipts totaling approximately $12 million from the state representing new federal Medicaid stimulus funding. This cash, combined with reduced 2009 Medicaid spending under the Federal Medicaid Assistance Percentage (“FMAP”) stimulus program could help cover gaps in the County’s 2009 budget.

Poloncarz concluded, “My office will continue to closely monitor County spending and revenues and will report to the public and Legislature concerning the County’s financial outlook.”