Ulster County budget raises questions about how future surplus will be spent

Not a word was said about revenues at the less-than-hour-long special legislative meeting to pass the 2022 Ulster County government budget via Vimeo early last Thursday evening. The session was all about expenses, with the non-assembled solons plowing through 32 budgetary amendments that had been gathered by the Ways and Means Committee.

A few moments after the meeting ended came a congratulatory message from county executive Pat Ryan to the legislature. Ryan described the bipartisan support of the 2022 budget as “an overwhelming vote of confidence.”

Is there such a thing as an embarrassment of riches? And if there is, can government be trusted to invest those riches?

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We’re about to find out in 2022. Ulster County residents will be watching closely to see whether a record financial surplus develops, and if so how it will be injected into an economy that could certainly do with a boost.

The 2022 county budget presents an incomplete picture of a once-in-a-generation bonanza likely but not certain to come. Conservative estimates of expected revenues have downplayed the robust financial picture by tens of millions of dollars.

The surplus undercount is mainly due to unrealistic estimates of the revenues from the local sales tax and from the strong likelihood of additional support by the state and federal governments.

The latest figures from state comptroller Tom DiNapoli suggest that 2021 sales-tax will exceed the county’s budgeted expectations by $26.2 million. DiNapoli’s office reported that Ulster County had accumulated sales-tax revenues through the end of October of $128.1 million. That’s already higher than the $120.6 million the county’s amended 2021 budget had anticipated for the entire year, leaving the revenues for the last two months of 3021 as a surplus over budget.

Last year, November and December had brought Ulster County $26.3 million in sales-tax revenues. Assuming that those two months of 2021 will bring in only as much sales-tax revenue as they did in 2020 – and each month of 2021 has do far brought in more than that same month did last year – year-end  total revenues from this source will be $154.4 million, a tidy $26.2-million surplus over what had been originally budgeted, and $10.4 million over what has been projected by the county government for 2022, and of course even more if revenues from this source increase over the 2021 figures.

Will the economy grow?

Is the economy likely to grow in 2022? There are downside risks from the continued impact of Covid, as Federal Reserve chair Jerome Powell last week testified before congressional committees, and from a cutback in the Fed’s present economic stimulus. Nevertheless, the majority forecast is at present still behind a growing economy in 2022.

But in these unprecedented times, no forecast is a guarantee.

Ulster County will receive another $17.2 million in coronavirus fiscal recovery funds in May 2022, the second and final tranche of the federal American Rescue Plan. Not all of the 2021 tranche of the same magnitude has yet been allocated.

Further, it is not known when projects funded by the trillion-dollar bipartisan infrastructure bill signed this month by president Joe Biden will begin to pay for actual projects. By funding some items in the county government’s list of capital projects, however, this legislation could be immensely helpful. If Ulster gets funding equal to its share of the national population (one twentieth of one percent), some $50 million will be spent on infrastructure improvements in the county under this legislation.

Some of these funds will come through the state, of course, which is also presently awash with cash from tax revenues and federal largesse. Albany  has its own priorities, but assistance to local government is usually one of them.

The even larger Build Back Better Act, passed two weeks by the House of Representatives and now awaiting Senate action, would bring more funding to Ulster County. By providing child care, environmental, social services and other funding, this money will help make balancing local governmental budgets easier. Governments at all levels will be able to serve a greater variety of human needs.

Some state money is sure to trickle down to Ulster County and its local governments. But will that happen in 2022?

Who can call the county’s financial prognosticators humorless? In the 2022 proposed budget, they predict state aid in 2022 will be seven million dollars less than it was in the adopted budget in 2021. The 2022 number in the Ulster County budget is almost certain a multi-million-dollar low-ball estimate.

The state advises local governments to run modest surpluses in case of unexpected costs or unrealized revenues. Surplus money can always end up in the fund balance at the end of the year.

The brow of Zeus

Do the unallocated funds in the 2022 Ulster County budget pose a problem, or do they represent an opportunity? It could be either, or both.

Faced with a variety of pressing social needs and an abnormally high degree of uncertainty about the economy, what is the most responsible course of action for county executive Pat Ryan and the county legislature to follow now that the 2022 budget has been passed?

Most organizations would conduct a risk analysis: identify the risk, analyze and evaluate it, deal with it, and then monitor and review it.

Applied to the county budget situation, that approach would entail a program of frequent review of the revenue picture during the year, analysis and ranking of social needs, an aggressive search for support from other levels of government, and constant communication between Ryan’s finance people and the legislature’s Ways and Means Committee (with the likely involvement of county comptroller March Gallagher).

Ways and Means chair John Gavaris has recently said that his committee had been scheduled to get an early preview of the 2022 tentative budget prior to its release. Because the executive office was waiting for additional numbers, however, that preview opportunity didn’t happen this year.

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That’s precisely the wrong approach. In Ulster County government, Ways and Means is the communications bridge between the elected executive and the elected legislature in matters of budgeting. In a coming year with so much uncertainty and so many pressing social needs, it would not be unreasonable to expect detailed monthly updates from the executive’s finance team to Ways and Means.

A county government that claims to be transparent should be transparent. Rather than emanating from the brow of Zeus, major policy proposals should be vetted in and deliberated at open meetings of Ways and Means.

Stay tuned.   

There is one comment

  1. Zorian Pinsky

    Very good, Mr. Sveikauskas. Thank you for keeping the community informed. Our elected officials have to fulfill their responsibilities. Otherwise, they should be replaced.

Comments are closed.