CANTON — Nothing in a state comptroller audit of St. Lawrence County that showed it in weakening fiscal health came as news to local elected officials or the New York State Association of Counties.
“There were no surprises,” said Legislator Frederick S. Morrill, D-DeKalb Junction, chairman of the county Finance Committee. “We agree in principle with it.”
The audit, released Thursday, shows that the county has cash flow problems and a marked decline in surplus funds, and that dealing with the lack of revenue has meant program cuts, tax increases and the possibility of an operating deficit.
“St. Lawrence County is walking a financial tightrope,” Comptroller Thomas P. DiNapoli said in a statement. “Recent budget decisions may leave the county without sufficient cash available for managing unforeseen events or closing budget shortfalls. Before the county gets in a financial bind, officials should develop a comprehensive long-range financial plan that will help identify operational and capital needs, monitor revenue and expenditure trends, and develop new financing sources.”
A five-year plan recently adopted by the county aims to take the burden off property taxpayers and address some of the comptroller’s concerns, but it requires an increase in sales tax to do that, said Legislative Chairman Jonathan S. Putney, D-Waddington.
The audit shows that the county has suffered from a loss of state-tribal casino compact revenue along with a general decline in state reimbursements while it has tried to become more efficient with a smaller staff and cuts from programs that residents like, such as funding for libraries and other outside agencies, Mr. Putney said.
“Over time, that has led to us having to shoulder more of the costs. We’re out of ammunition,” he said. “This is crystal-clear proof that we have needed for some time the sales tax increase. Until we get some assistance, the ride’s going to be a little rough.”
The county has long sought an increase in its sales tax from 3 to 4 percent, for what would be a total — with sales tax collected for the state — of 8 percent. State legislation that would allow the increase has been introduced by Assemblywoman Addie J. Russell, D-Theresa, but lacks a Senate sponsor.
A sales tax increase might be a short-term fix for St. Lawrence County, but the discussion needs to be broader as many other counties and municipalities are sliding down a fiscal slope, said Mark F. LaVigne, deputy director of NYSAC.
Counties have had to manage with a 2 percent tax cap, the 2008 recession and slow economic recovery, stagnant population growth over the last decade, unfunded mandates and increasing costs to operate local government. The state cannot limit how counties raise revenue through taxes while then requiring them to spend more money, such as what appears to be happening with proposed early voting dictates, Mr. LaVigne said.
“The audit is validating what St. Lawrence County has been seeing for some time,” he said. “Every county is in a unique point in the spectrum. It’s really a continuum. There’s a lot of upstate counties with stagnant growth.”
Without mandate reform, the reserves of other counties eventually will be depleted as those in St. Lawrence County are, Mr. LaVigne said.
Erie and Nassau counties have fiscal control boards, which have the power to rewrite the counties’ budgets and restructure labor contracts and other financial commitments. In 2011, the comptroller’s office slammed Rockland County for its budget practices that left it deep in debt. A number of cities in the state also are struggling, Mr. LaVigne said.
“I think that at all levels we have to innovate, have to become more efficient and we need to work with state partners so that we have more control over how local revenue is spent,” he said. “The confluence of factors calls for all of us to be working together. There’s a disconnect and we have to reduce that.”
The audit of St. Lawrence County found that officials relied heavily on fund balance to close budget gaps and keep taxes stable. As a result, surplus funds declined from $11 million in 2007 to a deficit of $1.7 million at the end of 2011.
Other audit findings included:
n In 2011, the county had a cash flow shortfall that required it to borrow $8.5 million, costing it $260,742 in interest.
n The requested increase in sales tax would generate $12 million annually.
n The board overrode the property tax cap and increased the tax levy by more than 14 percent for 2013.
n The county has put off work on roads and bridges and delayed purchases because of its cash shortfall.
The report recommended county legislators develop a policy that establishes a reasonable amount of fund balance to maintain its needs, provide cash flow and cut the need to borrow.
The county’s five-year plan in its first year focuses more on property tax relief than on rebuilding the fund balance, but Mr. Morrill said he thought the surplus could rise naturally if the county does not use all the money it set aside for contingencies.
“We need that for flexibility, but I think that will help with the fund balance,” he said. “I think our five-year plan does that. It just may not do it fast enough.”