Dutchess County financial officials are sounding alarms about a possibly huge hole in the county’s budget, after receiving the first state sales tax check for 2008 that came in considerably under projections.
However, according to the state association of counties, sales tax check shortfalls were common in 2007, but were then rectified for most counties when the final numbers were ultimately tallied at year’s end, raising the possibility that Dutchess County financial officials are crying poverty to maintain the party line in an ongoing dispute with the county legislature over hiring practices.
Pamela Barrack, the Dutchess County commissioner of finances, sent a Feb. 7 memo to County Executive William Steinhaus and Budget Director Valerie Sommerville in which she reports that the county had received its first sales tax check for 2008 from New York State. She reports that the $4.1 million payment was some “$400,000 less than the same period a year ago. This represents a decline of 8.3 percent from last year.”
Barrack adds that if the trend continues, and the county receives only 91.7 percent of its projected $126 million in sales tax revenue for 2008, “we could potentially have $11 million less revenue than is needed …”
However there is some uncertainty as to whether the dire forecasts are based on reality. The question arises because, according to Mark LaVigne, a spokesman for the New York State Association of Counties (NYSAC), numerous counties throughout the state saw a trend of reduced sales tax checks from state coffers starting about the middle of 2007, only to have those shortfalls eliminated when the final payments for 2007 sales tax were made.
“Last year, even as late as the end of December, counties were seeing severe shortfalls compared to the previous year and were falling short of projections, “ said LaVigne. “But when the final 2007 tax payments were made, most counties had their projections met and in some cases, even had slight increases.”
It’s not clear whether Dutchess County was in the same boat as other counties at this point last year, because Commissioner Barrack declined to address the question. A phone call placed to Barrack’s office was responded to hours later with an e-mail from her, reading: “How did the county finish the (2007 fiscal sales tax) year? We still have one more payment to be received for 2007 so there are no final figures. At this point I am more concerned with looking forward in 2008 which is why I wrote the (Feb. 7) memo.” She later followed up with a phone call to say that, although the data for 2007 is still incomplete, the county is currently “on track” to meet budget estimates for sales tax for 2007.
Politically astute and financially cautious
Barrack’s desire to present a worst-case scenario may stem from the political infighting between her boss, Steinhaus, and the county legislature, which for the first time in 30 years is controlled by the Democratic Party. After Democrats took over the majority this January, Steinhaus imposed a controversial hiring freeze, which may help reduce county costs and certainly helps reduce political patronage opportunities for Democrats newly returned from the political wilderness to power in the county.
Dutchess County Legislature Chairman Roger Higgins could not be reached for comment.
The county’s 2008 budget was about $394 million, with $126 million in projected sales tax receipts, $88 million in projected property tax receipts and almost $7 million in projected mortgage tax receipts.
Still, there is no doubt that the local and national economies are poised for a recession, adding some credence to Barrack’s calls for financial restraint, even if they may be based on fuzzy, politically-hued math.
NYSAC’s LaVigne said that his organization is working with officials from the state Department of Taxation and Finance to determine why so many sales tax checks in 2007 and 2008 are failing to meet projections, even while the final tally ultimately added up as expected.
“We don’t know what is happening. We are working with them (state officials) to get to the bottom of this. I only know there appears to be some irregularities in terms of regular (sales tax receipt) payments that seems to be consistently down, and yet the final figures meet projections,” said LaVigne. “We’ve been having multiple conversations with them but haven’t been able to find the cause of this phenomenon.”
And LaVigne said that concerns of financial shortfalls are grounded in economic realities facing the state and county governments. “We are on the verge of a recession, if we are not actually in a recession, so that makes it even more difficult to identify right now the cause of these shortfalls.”