Suffolk County, N.Y., budget bullish on sales tax growth
New York’s Suffolk County is leaning less on one-time revenue streams for its proposed 2018 budget, but the spending plan still relies heavily on sales tax growth, according to S&P Global Ratings.
Suffolk County Executive Steve Bellone proposed a $3.057 billion budget this month he says includes the fewest one-shot revenue measures since 2008. The budget if approved by the county legislature would freezes general fund property taxes for a sixth straight year.
S&P credit analyst Rahul Jain cautioned in a Sept. 21 report that the budget proposal is too dependent on sales tax revenue.
The county estimates sales tax collections to jump 2.8% from current year estimates, which Jain says is “slightly aggressive.” The county budgets $1.44 billion in sales taxes for next year and is also anticipates saving $30 million from not-yet-agreed upon changes to employee healthcare contributions.
“The budget plan reflects a continued dependence on relatively volatile sales tax revenues and successful implementation of a health care cost-saving initiative,” said Jain. "While an improving local economy should benefit the county and reduce the reliance on one-time revenue items, we believe some budget assumptions give rise to uncertainty that could, as has occurred in the recent past, lead to significant midyear budget adjustments.”
Jain noted that the county has taken positive steps to reduce one-shot revenues including interfund borrowing after utilizing $60 million from its stabilization reserve fund in the 2017 budget. The latest budget proposal does not borrow from the fund for operating purposes.
Revenue from property sales are budgeted at $24 million for the 2018 budget, which Jain says is “realistic” compared to $61 million included in the current spending plan. The budget proposal also includes no fee increases, which Jain noted had been a staple in recent Suffolk budgets.
S&P lowered Suffolk County's credit rating one notch to A-minus from A in June citing concerns about the Long Island county’s long-term reserves. Suffolk is rated A3 by Moody’s Investors Service and A by Fitch Ratings.