12/15/07 - County sales tax revenue exceeds projections

Joe McIntyre/staff photographer
Angela Kowalewski of Cortland puts fuel in her car at the Sunoco station on the corner of Church and Port Watson streets Friday afternoon. When fuel prices increase, the county receives more sales tax revenue.

(As published by Cortland Standard, Evan Geibel reporting)

Sales tax revenue projections for the year show Cortland County will take in more than had been budgeted for, but much of the gains will be negated when a statewide accounting glitch is fixed next year.

Deputy Treasurer Carolyn Kennedy said projections anticipate $23.4 million in sales tax revenue countywide by the end of the year.

“We’re coming in above our projection of $23.1 million,” Kennedy said Friday.
However, an accounting error in the payments disbursed by the state for the third quarter added about $300,000 to the county’s share.

“There’s going to be some adjustment made in the second quarter of 2008,” Kennedy said, adding that it would be a negative adjustment.

“I think they’re (the county) being somewhat conservative next year, knowing that it’s going to affect the level we receive.”

She said without that anomaly, sales tax revenue for 2007 would have been in-line with the budgeted amounts.

The county will not know for sure what the total receipts for the year are until the end of January, when the December figures are released by the state.

“So far for the fourth quarter, we’re up comparatively to last year, about $80,000,” Kennedy said. She said the increase is likely due to increases in fuel costs. “We collect tax on fuel, so when the fuel prices go up, we do collect a little more sales tax than we would otherwise,” Kennedy said.

County Administrator Scott Schrader said the county’s projected share of the revenue should be between $12.8 million and $12.9 million.

The county had budgeted $12.7 million for 2007, based upon 55 percent of the countywide total under a sales tax sharing plan with the city and other county municipalities.

This year was the first year of the multi-year sales tax distribution agreement that will gradually reduce the county’s share of the revenue from 56 percent in 2006 to 54 percent by 2008. From 2009 to 2012, when the contract expires, the county will receive 52 percent of the countywide total.

“I budgeted the same revenue for the county (in 2008) as I did for the previous year, but you need to remember that we’re giving up an additional 1 percent,” Schrader said Wednesday.

Schrader and Kennedy said sales tax revenues usually increase by about 1 percent each year, but this year’s projections — which include the anomaly — show a 1.35 percent increase over 2006.

For 2009, when the sales tax revenue for the county itself will drop 2 percent, thereby eating up the marginal 1 percent growth, Schrader said he would likely budget in a sales tax revenue reduction.

“Unless something dramatic happens, there’s no way that the growth in sales tax is going to offset the percentage we’re giving back,” Schrader said.

“You never know how sales tax is going to go, but if people have less and less disposable income, than it will go down,” Kennedy said. “But fuel is probably something that they have to use anyways.”