Niagara County's sales tax receipts have failed to match budget projections for the third consecutive year, and county Treasurer David S. Broderick blames declining gas prices, the declining Canadian dollar and purchases over the Internet.
But a key county legislator said Niagara County is not likely to abandon the 7 percent sales tax this year in favor of an increase to the 8 percent rate in all neighboring counties.
Greater efficiency is "all we have left," said Majority Leader Shirley G. Urtel, R-Cambria, who is also chairwoman of the Finance Committee. "We still have to be as miserly as we can with this government budget." The county will turn to consultants this year for help in finding fat in personnel costs and in crafting a five-year financial plan.
The 1998 budget assumed the county would receive $24,796,713 in sales tax. The actual revenue was $23,475,737, creating a shortfall of $1,320,976.
Not only was the sales tax revenue below projections, but it also failed to match the actual 1997 collection of $23,926,974.
Medicaid spending came in over budget, Broderick said. That is the largest single item in the budget, accounting for one-eighth of the total.
Broderick said the most important factor in the decline in sales tax revenue in 1998 was the plummeting price of gasoline. As prices for regular unleaded dipped below $1 per gallon at many stations for the first time in several years, sales tax receipts from gasoline purchases also declined.
Also dropping, and taking sales tax revenue with it, is the Canadian dollar. "I think, with the exchange rate, some people are shopping in Canada, rather than Canadians coming here," Broderick said.
"I think a third factor is Internet shopping," he said. "Unless they (online merchants) have a retail outlet in New York State, we don't get any sales tax."
Despite the downward trend in sales tax and the County Legislature's poor record in forecasting it, the Republican-controlled body included the same estimate of that revenue in the 1999 budget as was used for 1998.
"Maybe we should have cut that back," Mrs. Urtel said. "As we get into this budget process for 2000, we may have to reduce that. It's been short three years in a row."
The 8 percent sales tax is "a court of last resort as far as I'm concerned," Mrs. Urtel said, adding that if Niagara County ever did that, it would not be simply to bolster revenue. "If we did any kind of increase like that, it would be tied to a property tax decrease," she said.
To increase revenues while providing a fractional reduction in property taxes for 1999, the Legislature used $500,000 from the Mount View Health Facility fund balance, and $1.5 million from the county road fund. Budget Director Sharon Sacco said the latter was used for road projects.
"Nobody wants to see $2.3 million sitting in the road fund and not used for road construction," Mrs. Sacco said. "The (state) law requires you to do that (spend it). You can't just build up money."
Broderick said, "The taxpayers got the benefit of those idle funds." However, he admitted the surpluses from other funds could be called "one-shot revenues," money that won't be in the next budget.
"I don't think they'll be able to tap the road fund," Broderick said. "You don't want to leave them without cash flow."
The 1998 county budget estimated Medicaid spending at $23,450,000, but the actual amount is likely to be about $25 million, Broderick said. One factor is that there were 53 weekly reports in 1998, instead of the usual 52.
Also, there is a "lag factor" built in for payments incurred in one year but not charged until the next. That could in effect produce a 54th week of Medicaid costs, Mrs. Sacco said.
Another factor in the Medicaid increase was a Clinton administration effort to recruit more clients for the program, Mrs. Sacco said. "They're saying, 'We're going to make it easier to get on Medicaid,' " she commented.
The Legislature budgeted $23,850,000 for Medicaid in 1999, a $400,000 increase over the too-small 1998 projection.
Mrs. Urtel said she remains confident in that figure, but added, "I think we've seen the end of the big (Medicaid) savings."