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Wednesday, June 3, 2020

Top Stories > Health

County and state budget cuts imminent amid coronavirus economic slowdown

Apr 6, 2020

By Isabel Braverman - staff writer

SULLIVAN — The New York State Association of Counties (NYSAC) recently released a report detailing the economic impact of the COVID-19 pandemic on county governments, stating that New York's regional governments are now looking at a potential $2 billion loss in revenues.
The report's re-release comes after the state has re-estimated its projected loss of revenues.
Comptroller Thomas DiNapoli predicted a $4 to $7 billion loss in state revenue. Gov. Andrew Cuomo said that loss is estimated to now be between $10 and $15 billion.
“These revenue forecasts are very troubling for local governments and property taxpayers,” said NYSAC President John (Jack) Marren, Chairman of the Ontario County Board of Supervisors.
“Counties are on the front lines executing this public health state of emergency, while the state manages it and the federal government supports it financially. We've never seen anything like this, ever. Our personnel is exhausted, our resources are scarce, but our spirit to defeat this silent enemy remains strong.”
Sullivan County Manager Josh Potosek said the county's budget will be impacted in myriad ways, from sales tax to casino revenue to social services.
“Sales tax is one of our biggest revenue sources outside the property tax levy,” Potosek said. “That's certainly going to take a hit with the economy being shut down.”
He said NYSAC projected anywhere between a $1.85 million and $5.6 million reduction in sales tax receipts.
“So that's a decent size amount of money for our budget,” Potosek remarked.
The budget will also be impacted by casino revenue. The county receives casino impact revenue directly from the casino, which is different from the indirect room and sales tax.
Potosek said they get anywhere from $200,000 to $250,000 a month, so every month the casino is not open, “we're losing directly to our county government about $250,000 per month.”
With many people losing their jobs because of the coronavirus pandemic, local governments will be hit with associated costs.
“The demand on some of the programs in our Social Services Department—whether they're food stamps, HEAP, or general assistance because people are unemployed—are going to skyrocket,” Potosek said. “I couldn't even begin to guess how much that's going to be, but it's going to be at least in the hundreds of thousands if not millions of local costs.”
Another cost to the county is paying into the New York State pension system. Potosek said they currently pay around $9 million, and NYSAC estimated that will go up 20 to 30 percent, meaning the county could see a $2 to $3 million increase next year.
As Potosek and other county leaders navigate these changes in revenue and funding, they don't know yet what the overall impact will be.
“It's all going to be tied into the severity of the downturn and the duration. The shorter that is the better for finances and costs. The longer that is the worse it's going to be for revenues and costs,” Potosek said.
NYSAC's report covered two economic impact scenarios: one with mild recession and a quick recovery, and the second assumes a more severe and prolonged recession. Based on the most recent projections at the state level, the range of impact has doubled to a $2 billion loss in local sales tax revenue.
The report's estimates do not account for the local workforce related revenue losses, and the costs associated with responding to the COVID-19 pandemic.
“Every level of government is going to feel the impact of the COVID-19 crisis, and local governments are bracing for that loss of revenue. But we are also urging a partnership with the state as we confront the public health threat. We represent the same taxpayer at the local level and we have limited revenues,” said NYSAC Executive Director Stephen Acquario.
Potosek is taking some actions locally to mitigate that impact. Early on he said he froze non-discretionary spending, which is anything not mandated by federal or state government, local law, or in response to the coronavirus pandemic.
“Departments are not spending money on things they could defer to the future,” he said.
He also implemented a hiring freeze for all departments outside of the response to coronavirus, such as nurses or 24/7 operations, and is having those departments look at their 2020 adopted budget and re-submit on what's absolutely necessary to spend.
“We're taking the more conservative approach now, and if we cut a little bit too much and defer spending, if we do get an uptick in the economy, we will have a little more money than we thought,” Potosek said.

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