Making Democracy Work

Suffolk County Government Revenue Sources
Understanding sources and concerns

By Peggy Olness

The Suffolk County Legislature is the elected body responsible for public health and public safety, to maintain the county’s infrastructure (mostly roads and sewers) and provide assistance to those in need, for a population of 1.5 million people. The Legislature sets county policies, appropriates funding, levies taxes, reviews and adopts the annual budget and gives the comptroller authority to issue debt to finance capital projects and cash flow needs and issue bonds (incur indebtedness) for specific purposes.

By law the county must have a balanced budget: Revenue must equal expenditures. Also by law, it cannot tax income. Therefore, the county depends on other types of tax revenues, and in some cases borrowing, to meet the cost of the annual budget. The largest revenue sources (as you can see in the pie chart) are the sales tax, state and federal aid, real property taxes and various fees and grants.

It is important to remember that the annual operating budget is a plan for spending. Thus, during the year changes and adjustments must be made to the budget to accommodate what really happens to the tax revenue stream and necessary expenditures to meet the needs of the citizens (for example, a snowstorm).

While Suffolk County collects the taxes, not all of the tax monies collected go into the county’s general fund to pay Suffolk County expenses. The actual distribution of these revenues often involves other funds specific to programs or purposes.

An example of this is the distribution of the sales tax, which represents about 60 percent of the general fund revenue. Suffolk County collects 8.625 percent on most taxable items. The county gives New York State 4.375 percent and keeps the remaining 4.25 percent, which it may distribute in several ways including:

•By law, the Suffolk County Water Protection Fund receives a dedicated one-quarter cent (0.25 percent) of sales tax revenue, which goes to sewer rate relief, general tax relief, land acquisition (Suffolk County Environmental Trust Fund) and water quality protection.

•By need, the county may allocate up to 3/8ths of 1 percent (0.00375 percent) to the police district fund.

•New York State keeps 4 percent of its 4.375 percent sales tax from Suffolk County and gives the remaining 0.375 percent to the Metropolitan Transportation Authority. State and federal aid money is received from New York State and the federal government to fund various programs and varies depending upon the program. The total amount varies from year to year.

Real property taxes are imposed on property owners at a rate based on the value of their property. The New York State Property Tax Cap law limits the amount by which local governments and school districts can raise property taxes from one year to the next. Going over this limit (equal to the lesser of 2 percent or the allowable growth factor) requires a 60 percent vote by the government or district.

Another county constraint on the amount of real property taxes is that nearly a century ago the New York State Legislature enacted the Suffolk County Tax Act, which requires that the county general fund use the collected property tax revenue received to make all other taxing jurisdictions within the county (towns, schools, police and other county and noncounty taxing entities) whole even when property owners are delinquent in paying their taxes.

Certain aspects of this tax act create cash flow issues for the county and other local taxing jurisdictions. This problem is currently being reviewed by the Suffolk County Tax Act Study Committee to see what solutions may be possible.

In addition to the taxes on real property the county also collects revenue from real property tax items. These include the revenue on the sale of defaulted properties; interest and penalties on unpaid taxes; and payments in lieu of taxes (PILOTs), which are reimbursements for properties that are off the tax rolls because they are owned by the federal government or exempted for other reasons. These real property tax items sometimes contribute more revenue than real property taxes themselves.

Beyond the various legal constraints mentioned, sales tax and property tax revenues tend to rise and fall with the economy since people spend less in bad times; this can place more burden, relatively speaking, on people with lower incomes. Due to the 2008 Great Recession, sales tax revenues dropped and have not recovered enough to produce sufficient revenue as county expenditures have increased. In 2017 county sales tax receipts grew by 4.28 percent but still came in $2.4 million short of budget projections. Therefore, the county has had to find other ways to generate more revenues.

The county has tried to solve the problem by increasing old fees and imposing new ones. Unfortunately, these new fees have not been enough, and since 2014 the county has had to borrow a total of $166.3 million from the Assessment Stabilization Reserve Fund (ASRF) to make up the shortfall. In 2018, the county must begin paying back the ASRF.

The new federal tax law, which took effect in 2018, may have significant effects on the county economy, thus leading to more uncertainty about budget projections in the coming year.

(Based on information presented in the Review of the 2018 Recommended Operating Budget prepared by the Suffolk County Legislature Budget Review Office.)

Peggy Olness is a board member of the League of Women Voters of Suffolk County, a nonprofit, nonpartisan organization that encourages the informed and active participation of citizens in government and influences public policy through education and advocacy. For more information, visit, email or call 631-862-6860.

By Peggy Olness

In 1968, the citizens of Suffolk County voted to adopt an amendment to the Suffolk County Charter that replaced the Suffolk County board of 10 town supervisors with elected legislators from the 18 legislative districts designated in the amendment. Among the major duties given to the Suffolk County Legislature was the duty of reviewing, amending and approving the annual budgets needed to allow Suffolk County to function.

A budget is a plan that looks at the revenue expected for the fiscal year and the best way to spend to provide the needed services during that fiscal year. The Suffolk County fiscal year runs from Jan. 1 to Dec. 31 of each calendar year. During each year the legislature must review, amend and adopt three budgets to allow the county to function during the next fiscal year. These budgets are:

•The capital budget covers major construction expenditures such as road and bridge repair and construction, most of which extend for periods of more than one year. The capital budget is reviewed during the spring and usually approved by May.

•The operating budget funds the day-to-day operations of the county departments and agencies and is reviewed in the fall and usually approved in November so that spending can begin Jan. 1 of the next fiscal year.

•The community college budget funds the county’s community college system and is reviewed during the summer and usually approved before the start of the community college fall semester. The college budget covers a period coinciding with the school year.

The operating budget generally receives most of the attention because it has the largest impact on our day-to-day lives and the services citizens receive. The operating budget process begins in the spring when the county executive tells the county departments and agencies what he expects the county financial situation will be in the next fiscal year and requests each department/agency head to submit a budget request for the coming fiscal year based on those expectations. 

The county executive’s budget staff reviews the requests and works with the departments/agencies to produce a budget with which the county executive’s office is comfortable. This budget request is then sent to the county legislature. Each legislator receives a copy, and the legislature’s Budget Review Office begins work on the review and evaluation of the facts and figures in the county executive’s budget request so that it can advise the legislators on any concerns or problems that may occur.

Suffolk County relies on sources of revenue to fund the county budget that are problematic. While the federal government and the states can tax incomes, the county is limited to sales taxes, property taxes and various fees such as the motor vehicle surcharge and the tax map certification. Unfortunately, both sales and property taxes are considered “regressive taxes.” When the economy is good, these taxes produce a sufficient amount of revenue. However, when the economy is bad such as during the recent Great Recession, the revenue from these tax sources is reduced and has not covered all the county’s expenses. 

There are limitations on the amount of revenue the county can draw from these sources. New York State caps the property tax increase each year (2 percent at present). To exceed this amount would require a 60 percent vote by the county legislature.

Currently, the sales tax provides about 60 percent of the general fund revenue. As a result of the sluggish economy, the county has been forced to borrow from several sources to balance the budget since 2008. These loans must now be paid back. Moreover, the sales tax revenue has not rebounded sufficiently to cover the budget. An underlying problem with the sales tax is the increase in internet sales at the expense of “brick and mortar” local store sales. These online sales do not return sales tax to Suffolk County.

In future columns, the League of Women Voters will review some of the problems Suffolk County faces in the future as a result of the changes in the local economy.

Peggy Olness is a board member of the League of Women Voters of Suffolk County, a nonprofit, nonpartisan organization that encourages the informed and active participation of citizens in government and influences public policy through education and advocacy. For more information, visit, email or call 631-862-6860.