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Erie County makes plans to combat loss of sales tax revenue this summer

Posted at 5:18 PM, Mar 26, 2020
and last updated 2020-03-27 03:35:10-04

BUFFALO, N.Y. (WKBW) — The plan is to not have to use the plan.

But Erie County is getting its ducks in a row in the event we face large deficits to the county budget because of the loss of sales tax revenue.

“Restaurants are closed, hotels are closed, no one is buying a car right now, and that is going to have a massive impact on the Erie County budget,” said Erie County Comptroller Stefan Mychajliw. “Our largest source of revenue is sales tax revenue — not property tax — it’s sales tax revenue.”

Right now, Erie County is in definite fiscal shape, said Mychajliw.

The county has $235 million cash-on-hand.

That balance, under normal circumstances, would pay the county’s bills through the third quarter.

But, with restaurants and stores shut down, an analysis by the comptroller’s office found the county could be looking at significant losses come June.

If there is a 10% decrease in sales tax revenue, we’d have a $16 million deficit, and if there is a 50% decrease in sales tax revenue, the budget would see an $80 million deficit.

Right now, the county has $102 million in its “unassigned fund balance.”

Every legislator except for Jeanne Vinal voted in favor of the measure. Vinal wanted to wait to see how the federal stimulus bill money could be used before approving the potential use of this borrowing plan.

“The sales tax is going to be down permanently, a short term loan - this is not appropriate for it,” she said.

Republican minority-leader Joe Lorigo voted in favor of the plan but approved the timing of passing the measure.

“We called a special session today when we weren’t supposed to be here,” he said. “That sends the wrong message to taxpayers in Erie County that we’re running out of money when we’re not.”

He said he thinks the timing of this meeting would make taxpayers worry, when the county is doing well financially, right now.

“The special session is what I took issue with. We are going to be here next Thursday; we could’ve done the exact same thing next week without causing more fear and panic in people who might not know where their next paycheck is coming from. Now, they have to worry the government might be running out of money, as well.”

Comptroller Mychajliw says the county executive asked the financial branch to look into authorization to borrow.

“From our perspective, it doesn’t hurt in any way, shape, or form to have the authorization to borrow rather than delaying it,” said Mychajliw.

The way the comptroller’s office understands the federal stimulus bill — Erie County is the only government in Western New York that will qualify for $159 million in federal aid for coronavirus expenses because it has a population of over 500,000 people.

The question now is whether loss of revenue qualifies as a coronavirus-related impact.

“Can we make an argument to the federal government that a loss of sales tax revenue is a coronavirus-related impact? We might. It all depends on what the federal government allows.”

Governor Andrew Cuomo, during his Thursday morning briefing, is not optimistic revenue will be seen as an impact by the federal government.

“It’s earmarked only for COVID virus expenses, which means it does absolutely nothing for us in terms of lost revenue.”

The comptroller’s office is keeping a close eye on expenses by the county after the legislature approved $5 million for emergency COVID-19 response which, according to the county executive’s office include:

  • N95 masks and other protective equipment for frontline workers, especially healthcare workers
  • Equipment for the lab including an additional PCR machine and other equipment to speed up testing
  • Staff time as DOH’s Epidemiology unit grows into a larger 24/7 operation
  • Information Tech needs to allow Erie County to implement social distances and have employees work remotely, as well as additional phones and computers for the call center