Nassau County’s government received $1.09 billion last year in sales tax revenue, an ominous sign for its policymakers, according to a report issued this month by county Comptroller George Maragos (R-Great Neck).
The Mangano administration anticipated in late 2013 the county would collect $1.16 billion in sales taxes in 2014 and that $70 million-plus difference between the projected number and the actual one largely explains why Nassau’s expenditures exceeded its revenues last year.
Moreover, Comptroller Maragos’ report highlighted a fact which is not widely appreciated by the general public—sales taxes, not property taxes, constitute the single largest source of revenue for Nassau County’s nearly $3 billion annual operating budget. Sales taxes usually account for about $1 billion of what is sent in the form of taxes each year to Mineola, the county seat, whereas property taxes generate more than $800 million.
In a troubling development, 2014 was the first year since 2009 in which the county’s sales tax collections declined from the previous year. In 2010, Nassau received $992 million in sales taxes, and that number grew by 3.6 percent in 2011, another 4.2 percent in 2012, and then spiked by 6.3 percent in 2013, as compared to 2012, as Nassau residents and businesses spent heavily to recover from Sandy, the comptroller’s office determined. The county’s 2014 sales tax receipts constituted a 4 percent, year-over-year, decline from 2013 ($1.13 billion).
Nassau’s sales tax rate is 8.625 percent, with nearly half of the monies derived from this tax (four percent) going to New York State. The sales tax itself is levied depending on where a service is performed, or where goods are delivered. For instance, a Nassau business which delivers a product to upstate Saratoga County would have that customer pay the Saratoga sales tax of 7 percent. Suffolk County has the same sales tax as Nassau (8.625 percent), and New York City has the highest such levy in the state (8.875 percent).
Upon releasing county government’s 2014 unaudited financial results, Comptroller Maragos said Nassau would likely end 2014 with a $10.7 million surplus while acknowledging the surplus was achieved by having the county borrow $121 million, and draw down $16.2 million of prior-year fund balance monies. The comptroller, a countywide elected official, said the county Legislature authorized these steps “to pay property tax refunds, judgments and settlements, and police termination pay.”
“The increasing reliance on borrowing and use of fund balance is concerning and should be avoided,” Comptroller Maragos continued, in a formal statement. “Additional structural reforms and new initiatives are needed to bring expenses in line with revenues by reducing the high levels of police overtime costs, and reversing the declining trends in departmental revenues and sales tax.”
The higher police overtime costs may recede soon as new police officers are hired but county departmental revenues and sales tax collections are going to be difficult to jump start, especially since the now-discontinued school zone speed camera program generated an astonishing $28 million for Nassau’s coffers in 2014. The county’s Department of Parks, Recreation & Museums (field and property rentals, parking and admission fees), and the County Clerk’s office (mortgage recording fees), are other major Nassau governmental revenue sources.
Still, when all is said and done, Nassau County’s long-standing over-reliance on sales taxes is the main reason its budgetary problems endure.
Mike Barry, vice president of media relations for an insurance industry trade group, has worked in government and journalism.