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Finance Director David Squires told the Legislature’s budget committee today that he expects that sales tax revenue for 2009 will come in $2 million less than budget, a half-million dollars less than earlier projections.  He warned that mid-year adjustments to the 2009 budget will be required, the first time in 17 years that such action has been taken.

Reporting on monthly sales tax distributions to the County, including the June distribution just received today, Mr. Squires told the Budget, Capital and Finance Committee he expects that the County will receive about $28.5 million in sales tax revenue, compared to the $30.5 million budgeted for 2009.  June’s distribution was down more than 6% from 2008.

“This is the largest single problem we have had to deal with since 1992,” the director noted.  “The County will have to react in the current budget to address this.”  That year was the last time that the County had to act within the budget year to react to problems during the year.  Squires said the County’s 2009 receipts are tracking closely to revenue received in 2007.  Earlier sales tax projections had forecast a 2009 shortfall of $1.5 million.

County Administrator Joe Mareane advised the committee that this problem comes at a time of additional pressures on the 2009 budget, including rising costs in the Department of Social Services, which is coping with a significant increase in welfare caseloads due to the state of the economy.  While noting that the County still has $1.8 million in federal stimulus funding to apply to current-year fiscal constraints, the administrator said that he, Director Squires and budget chair Jim Dennis will analyze alternatives and will recommend a course of action to the Legislature to bring the 2009 budget into balance.

Administrator Mareane also cautioned that this situation clearly affects planning for the 2010 budget.  “There will be some very difficult decisions and very tough realities to deal with in our 2010 budget.”  The administrator said it is clear that the County must restructure to operate in what he described as the current “hostile environment.”  The administrator commended department heads, who are beginning to prepare their budget proposals, for their thoughtful and sensitive approach, as the County tackles the difficult task of addressing the difficult budget situation.

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