LI sales tax revenue lags expectations

Sales tax collections on Long Island continue to fall well below expectations, with revenue dropping 9 percent in Nassau for the first half of 2014 while remaining essentially flat in Suffolk.

In Nassau, County Comptroller George Maragos projects a $90.7 million shortfall in sales taxes if collections continue at the current pace. The county has collected $47.6 million less for the first six months of this year compared with the same period last year. Revenue would have to increase 11.7 percent for rest of this year to reach the adopted budget of $1.166 billion in sales taxes, county finance officials reported Friday.

In Suffolk, sales tax collections grew by only $2.8 million, or 0.5 percent for the first half of the year, far below the county's budgeted 2014 increase of 3.63 percent. To reach budget, collections would have to grow by 6.1 percent for the rest of 2014, county officials said.

Earlier this year, officials in both counties had attributed a steep decline in sales tax revenue during the first quarter to the harsh winter. Now many say post-superstorm Sandy spending last year created an artificial bump that has now disappeared.

Nassau budget director Eric Naughton questioned state calculations for distributing sales tax and said he plans to review sales tax payments "business by business."

But Maragos, who had warned after collections dropped by 14.8 percent in the first quarter that flat income growth and a shift to Internet retailing would continue to hold down revenue, said, "The impact of these trends now appears pronounced and may be long-lasting."

He urged Nassau County Executive Edward Mangano and Nassau's financial control board, the Nassau Interim Finance Authority, to "take immediate action" to deal with the shortfall.

In Suffolk, Justin Meyers, a spokesman for County Executive Steve Bellone, said the county's outside consultant, Moody Analytics, has lowered projected sales tax growth to 2.45 percent for the year, which would result in a $15 million shortfall.

Meyers said the administration has left 100 more jobs open through attrition to save $10 million and is reviewing other possible cutbacks. Suffolk is estimating a budget deficit of $90 million to $170.3 million between this year and next.

In Nassau, while Maragos projects a $90.7 million shortfall, the legislature's independent Budget Review Office said it could range from $101.4 million, if sales taxes decline 5 percent for the rest of the year, to $40.5 million, if collections grow 5 percent. Naughton's office predicts a $50 million drop-off in sales taxes, but insists the county will still have a slight surplus by the end of this year.

The sales tax decline comes as Nassau and NIFA ended a wage freeze for four county unions and are poised to restore salary increases to a fifth, the corrections officers association.

NIFA chairman Jon Kaiman said Friday the sales tax report would not derail the corrections officers' deal because NIFA had required Nassau to come up with "a multitude" of resources to cover all union contract expenses. He noted the county has increased various fees, received state approval to install speed cameras in school zones and is considering a sewer district management contract expected to save millions of dollars.

But NIFA member Chris Wright said the sales tax decline shows "we need a course correction: The county will have to adopt a better strategy than 'phone-a-friend' or 'dial-a-gimmick,' and NIFA will need to be a prudent fiscal control board, not a time machine back to fiscal practices of the 1990s."

Presiding Officer Norma Gonsalves, (R-East Meadow) had turned down an earlier request from Minority Leader Kevan Abrahams (D-Freeport) for an emergency budget review committee hearing after the first quarter sales tax decline. Abrahams Friday again called for a meeting. "It's important to have a hearing on how to address this shortfall," he said.

But Gonsalves spokesman Frank Moroney said, "A Budget Review committee meeting is not going to result in any increase in revenue from sales tax. When you're facing an economic stressful time, you don't need a committee. You need to manage to the problem."

In Suffolk, Presiding Officer DuWayne Gregory (D-Amityville) has already asked legislative budget analysts to come up with options to offset the sales tax shortfalls.