When the New York State comptroller’s office recently tallied up local sales-tax revenues at the halfway mark in the 2017 calendar year, it turned out that Ulster County government was up significantly higher than it had predicted. Back in November, Ulster County had budgeted a 1.1 percent increase for 2017. Instead, the take had been 4.3 percent higher, the state taxation and finance department disclosed. Ulster County’s first-half sales-tax collections of $54.9 million as compared to last year’s $52.7 million both included the 11.5 percent of revenue shared with the City of Kingston and three percent with the towns.
When it comes to sales taxes, the difference between budgeted revenues and actual revenues isn’t chump change. For Ulster County, each percentage point above what was budgeted means close to a million dollars in revenue. If the current 4.3 percent pace continues in the second half of the year, Ulster County government coffers will gain almost $3 million in unanticipated revenues. That surplus will be a useful cushion in an era when the impacts of economic uncertainty, cutbacks in federal financial aid, increased healthcare costs and the decline of bricks-and-mortar retailing are not unknown.
There are financial standards used to decide whether local jurisdictions are behaving prudently in regard to generating sufficient revenues to pay their bills. On July 31, county comptroller Elliott Auerbach issued a positive report in regard to Ulster County’s financial health. The local comptroller conducted a five-category “stress test” based on the state comptroller’s guidance.
His conclusion? Ulster County government is in a very secure financial position. “At the close of 2016, Ulster County was the most fiscally stable it has been since [the state] implemented the [stress] test.” Auerbach commended “the current administration” of county executive Mike Hein, a sometime political opponent, “for being able to find efficiencies within deficit budgets and manage a surplus to increase the fiscal stability of the county.”
You heard it here first. Even in a Trumpian universe, none of the gloom-and-doom scenarios are or will be of sufficient magnitude to erase the growing surplus in sales-tax revenues when the county fashions its tentative 2018 budget in the next month or so. The product of a combination of cautious county budgeting last fall and a reasonably healthy level of consumer spending, the sales-tax revenue cushion is of sufficient magnitude that county property taxes will almost certainly not be raised in 2018.
There’ll be the usual huffing and puffing from county officials about how difficult that upcoming task is likely to be, of course, but short of a major negative event the eventual outcome later this fall is a foregone conclusion. Expect a county property-tax bill next January not much different from the one you got this past January.
As the catastrophic consequences for local government of the steep and unprecedented downturn of consumer spending in 2008 and 2009 recedes into history (statewide sales-tax revenues were flat from 2005 through 2010), New York State’s local sales-tax growth has remained in a narrow range between three and five percent a year. That’s roughly what the state can count on. If the result falls outside that range, a mid-course correction could be considered, especially if the personal-income-tax revenues are being similarly affected.
At the single-county level, to the consternation of local budgeters, the range can be considerably wider. Taxation forecasts are frequently disrupted by local factors as simple as late payments by a single big retailer, changes in energy prices, shifts in consumer habits caused by geographic competition, and a catchall called “technical adjustments.” Prudent county policy would be to carry a sufficient reserve to smooth out such perturbations but not so much as to hoard taxpayer monies.
Steady increases in revenue are a wondrous thing. Governments, not-for-profits, businesses and individuals alike covet upward revenue flow that they can count on. Conversely, budgeters fret a lot about when they detect a diminution of this kind of cash. Is the change merely a hiccup, a one-year statistical anomaly unlikely to be repeated? Or is it a signal that serious and unwelcome disruption in the economic landscape is likely to be occurring?
Budgeting should not be liberal or conservative. It should be realistic and prudent. Ten months ago, O’Connor & Davies, Ulster County’s consulting auditors, explained their revenue estimates for 2017. “Given the uncertainty surrounding sales-tax collections and in order to remain conservative,” their report said, “our projection for 2016 assumes an increase of 1.25 percent for the remainder of the year, consistent with the administration’s growth projection for 2017.” A one percent growth rate for the whole year was appropriate, the firm said, “as it is more conservative.”
Huh? By that logic, a heap of conservative projections piled on top of each other would lead to larger and larger governmental surpluses. Many conservatives argue that larger surpluses only encourage unjustified government spending. Would it not be ironic indeed, with federal funding budgeted at $41.3 million in 2015, $40.7 million in 2016, and $38.5 million this year, if cuts in local aid from Washington would end up eating all of Ulster County’s gains in sales-tax revenues?
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