Erie County budget officials and Comptroller Stefan I. Mychajliw sparred Thursday over the administration’s first-quarter sales tax revenue projections.
Mychajliw, whose office earlier this week completed its first-quarter financial report for 2013, said projections by County Executive Mark C. Poloncarz’s administration were aggressive and overly optimistic.
“It’s a serious concern, because it could blow a hole in this year’s budget,” Mychajliw told the Legislature’s Finance and Management Committee.
The administration estimated an annual 3 percent growth in sales tax revenues, but the actual receipts for January and February showed only 0.83 percent growth. A final revenue amount for March won’t be available until mid-May. Mychajliw said sales tax revenue needs to grow 3.73 percent throughout the entire year for budget officials to reach their targeted revenue projection of $426 million. Anything less than 3 percent growth could create a budget gap, he said.
“A 2.36 percent growth in sales tax revenue for 2013 would create an approximately $5.6 million gap in this year’s budget,” he said.
Deputy Budget Director Timothy Callan, who acknowledged that sales tax receipts for the first quarter are $1.3 million below what the administration projected, insisted the comptroller was being alarmist.
Callan said the first three months of the year are typically the slowest tax revenue period of the year, adding that sales taxes, as a revenue stream, are extremely volatile, with frequent swings from month to month.
“So if we’re only short $1.3 million in sales tax for the first quarter, the lowest quarter of receipts, we should not be panicking. The comptroller is panicking,” said Callan.
Budget Director Robert W. Keating said it was best to be off where the base is fairly small relative to rest of the year.
“You don’t want to be down 0.83 percent growth at Christmas,” Keating said, contrasting that to being off “in January and February, when it’s relatively small anyway,”
While Mychajliw acknowledged the fluid nature of projecting sales tax revenues, he insisted that the administration’s projections were too high.
“We will continue to closely monitor sales tax revenue to determine if the administration’s overly optimistic and aggressive projections will create a hole in this year’s budget,” he said.