Friday, February 5, 2010

When Tourists Stay Home, Local Governments Suffer

Last year, for the first time in decades, sales tax revenues in the Lake George region declined in every one of the year’s four quarters. Revenues dropped by as much as 15% over the summer. That’s not only an indication that resorts, restaurants and shops saw less trade in their busiest season than in years past; the drop in revenues left local governments scrambling to fill gaps in their budgets.

According to Warren County Treasurer Frank O’Keefe, 1.5% of the 7% sales tax collected by New York State in the county is distributed to local towns.

And, as O’Keefe explains, “The sales tax is apportioned on the basis of a town’s share of the collective value of the property in the county.”

Lake George, Bolton and Hague represent approximately a third of the value of all property in Warren County, and the lion’s share of sales tax revenues are returned to those towns and to Queensbury, where more than 32% of the assessed value of the county is located.

At the start of 2009, Warren County expected to receive approximately $45 million in sales tax revenues; instead, it received only $42 million, a drop of more than 8%, O’Keefe said.

Newly-elected Town Supervisors in Lake George and Bolton now find themselves with less revenues, and less flexibility, than their predecessors had.

The Town of Bolton received $3.2 million, approximately $333,000 less than it had received the previous year.

“That could have been devastating,” said Bolton Supervisor Ron Conover, who said he had carefully observed the previous administration’s budget making process before he himself took office in January.

“Whenever there’s a drop in sales tax revenues, there’s additional pressure on property taxes,” he said.

While the town’s tax rate did rise by 2.5%, that increase was much less than one that hit residents of Lake George, where municipal taxes rose by 26%.

“The members of the Bolton Town Board were very careful, knowing that sales tax revenues would be impacted by the recession. They knew this was no time for wishful thinking,” said Conover. “The Board went over every expenditure. The result was a good budget that allows the town to operate without reducing existing levels of service.”

Warren County estimates that Bolton’s share of sales tax revenues will rise in 2010, but Conover says the town will continue to follow a prudent course.

“Sales tax revenues may rebound, although not to the historically high levels of the past; but if the economy picks up, it will take some pressure off the property-owners’ taxes,” he said.

Although Bolton will watch its expenses, it will continue to maintain and improve its infrastructure of parks, beaches and public docks, said Conover.

“These are assets that we need for economic development and tourism,” Conover said.

In Lake George, according to Supervisor Frank McCoy, sales tax revenues dropped by 12%, leaving the town with $300,000 less than it had anticipated, said McCoy,

The market for recycled paper and plastic also crashed, costing the town another $100,000 in revenues, said McCoy.

But those losses in revenue were not wholly responsible for the 26% increase in property taxes, McCoy said.

For the past several years, the town had drawn from its reserves rather than raising taxes; by mid-2009, those reserves were all but exhausted.

“From 2004 to 2009, we chipped away at the reserves,” McCoy acknowledged. “Instead of using the reserves, we should have increased taxes incrementally, by 3% a year.”

The increase in property taxes will enable the town to rebuild its reserves, McCoy said.

“We’re on the road to recovery,” said McCoy. “We’ll watch the pennies, we’ll review finances monthly and meet with department heads every quarter to make certain we’re on track, just as any business would.”

No reductions in the town work force are planned, said McCoy.

Any new positions would be part-time posts, he said.

“Last August, when the sales tax revenues dropped, we went into an austerity mode,” said McCoy. “We’re still in an austerity mode.”

For more news from Lake George, read the Lake George Mirror

Photo: Newly-elected Bolton Supervisor takes the oath of office with his family at his side.

Related Stories


Anthony F. Hall is the editor and publisher of the Lake George Mirror.

Anthony grew up in Warrensburg and after an education that included studying with beat poet Gregory Corso on an island in the Aegean, crewing a schooner in Hawaii, traveling through Greece and Turkey studying Byzantine art and archeology, and a stint at Lehman Brothers, he returned to the Adirondacks and took a job with legendary state senator Ron Stafford.

In 1998, Anthony and his wife Lisa acquired the Lake George Mirror, once part of a chain of weekly newspapers owned by his father Rob Hall.

Established in the 1880s, the Mirror is America’s oldest resort newspaper.





Comments are closed.