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SALES TAX REVENUE DECLINES; Comptroller calls for less spending


County Sales Tax Revenue Decreases for first time since the “Great Recession,” leaving potential $11.2 million budget hole

(Buffalo, New York) – Erie County Comptroller Stefan I. Mychajliw sent his second spending warning to the Erie County Legislature in just two weeks, along with an ominous report on sales tax revenue decreasing for the first time since the “Great Recession.”  Comptroller Mychajliw shared yet another in-depth financial report, this time warning that the potential budget deficit, because of a year-to-date decrease in sales tax revenue, has grown to $11.2 million. 

“I just received new numbers from the state for April and part of May.  The decline in sales tax revenue has gotten significantly worse.  The $8.5 million budget hole has now grown to $11.2 million.  That is a startling number.  It is nearly twice our entire Park’s budget.  Usually sales tax revenue grows slightly and comes in under budget.  Now there is a year-to-year decline,” said Mychajliw. 

“Only twice in nearly 20 years has Erie County had years where sales tax revenue decreased.   Each of those had special circumstances.  One being the ‘Great Recession’ of 2009.  The other, was in 2004, leading to the ‘Red-Green’ budget crisis.  I will continue to monitor this very closely.  The County needs to put the brakes on new spending,” continued Comptroller Mychajliw, who also noted spending within Erie County government has increased nearly $90 million since January of 2012.

The first budget warning letter, dated June 2, 2016, advised the Legislature that for the first quarter of 2016 sales tax revenue only grew by .61%, despite needing a 1.53% growth rate to meet the budget proposed by the County Executive and passed by the Legislature.   The Comptroller warned that if this slow growth rate kept pace, the County would be facing an $8.5 million hole in the budget.

“In 2005, Legislators solved the problem by raising the sales tax rate.  In 2009, the county had massive cuts in the budget to bide time until the economy improved.  In 2016, a strong starting place would be to stop spending so we can avoid a crisis.  A tax increase on our already struggling families is unacceptable,” said Mychajliw.

Specifically, sales tax revenue for April 2016 decreased 3.24% from April of 2015.  For the first four months of 2016, sales tax revenue is down 0.34% compared to 2015.

“Had this not been a leap year, that number would be down 1.4%, and the potential budget deficit would be even greater,” said Mychajliw.

While the Comptroller’s Office only has the revenue statistics for the first half of May, the trend downward is not promising.  “I will continue to monitor and report to the Legislature the progress of sales tax collections.  I will also remind the County Executive to be mindful of spending. He needs to learn to live within his $1.7 billion means, which is a lot to begin with,” concluded Mychajliw.