County set to end year with $10.5M deficit

Ulster is likely to end 2020 with a deficit that is a fraction of the multimillion dollar shortfall predicted.

KINGSTON, N.Y. » Ulster County Finance Commissioner Burt Gulnick said the county is likely to end 2020 with a deficit that is a fraction of the multimillion dollar shortfall predicted at the beginning of the coronavirus pandemic.

In an interview Wednesday, Gulnick said the county is now on track to see a $10.5 million budget shortfall and could end up with only a deficit that is even less, rather than the $34 million shortfall he predicted in April.

But he disagreed with Comptroller March Gallagher, who said in a report that the county could actually end up better off than in 2019, when the county ended the year with a $7.2 million deficit.

In a third-quarter financial report released by Gallagher’s office Tuesday, the comptroller said the county began to bounce back financially from the worst of the pandemic during the third quarter of the year as outdoor dining and other businesses began to reopen and people began to return to work. Unemployment rates dropped during the third quarter as did demand for Supplemental Nutrition Assistance Program benefits and other social services programs.

And while she warned that the second wave of the pandemic now sweeping the region could affect the gains the county has made, she said for the most part it appears the county has weathered the storm.

“The immediate outlook is a return to less activity over the winter as we face the COVID-19 surge, but the long-range impact is positive given coming vaccines,” the report stated.

Through a variety of costsavings measure, the county was able to save $12.9 million, and at the end of August had spent only 59 percent of the $342.9 million in budgeted expenses for 2020, 12 percent less than by the same time in 2019, when the county had spent 67 percent of the county’s $329.3 million budgeted expenses, the report stated.

However, according to the report, consumer-generated revenues are down, most notably, sales tax revenue, which is the county’s single largest revenue source.

According to the report, the county has taken in only 54 percent of the sales tax revenues projected, a marked decrease from the 61 percent received through the same time in 2019.

“We’re not going to make budget (for sales tax),” Gulnick said. “Not at all.”

Gulnick said sales tax will likely come in at about $122.5 million, $6 million less than the $128.5 included in the 2019 budget.

Gallagher also stated in the report that the county will fall short in occupancy tax revenues, paid by people staying in hotels, motels and other short-term accommodations, as well as motor vehicle use tax revenue, which is paid on car sales.

But according to the report, “the difference between actual revenues compared to the actual expenditures at the end of the third quarter indicates a surplus, meaning revenues are higher than expenditures at this time.

“This year we have a surplus that is $21.03 million more than the 2019 surplus. ... We know 2019 ended with a $7.2 million deficit, but the significant difference in surplus at this point in the year indicates that 2020 may not experience as much of a deficit as 2019,” the report stated.

“I would not say we are going to be better off than we were in 2019,” Gulnick said, although he said the county could ultimately end with a deficit of even less than the $10 million he predicted as of September. “We may be near that $7 million number when all is said and done, but I wouldn’t say its going to be

better.”

He said Gallagher’s rosier outlook is based on a “misreading of state and federal aid and the timing of the revenue.”

According to the report, the county received 46 percent of its budgeted revenue through the third quarter of 2020 as compared to the 41 percent it received during the same timeframe in 2019. Additionally, the report states the county received 38 percent of the federal aid budgeted compared to the 11 percent during the same time in 2019.

Gulnick said the comptroller’s assumptions are based on an inaccurate comparison of state and federal aid received in the third quarters of 2019 and 2020.

In the past, Gulnick said, the Department of Social Services had been slow in filing claims for reimbursement, which skewed the reporting of those revenues.

Gallagher said timing of those payments “can have dramatic impacts.” She said the report was based on information the office could obtain at that time and said it took into effect the uncertainty of state and federal.

“We used the word ‘ indicates’ based on the financial data at the time we pulled the reports and ‘ may’ intentionally because of uncertainty related to state aid mentioned ...,” Gallagher said in an email.

“However,” she stated, “based on the numbers, where we stand in 2020 is better than last year at the close of the third quarter.”