MONTICELLO, NY — The season approaches when Sullivan County will put together its budget for the next fiscal year. The county’s auditors recently conducted their review of its finances, and presented before a Thursday, July 20 meeting of the county legislature. 

The verdict? Sullivan County is in good financial shape. While there are several financial challenges it will face in the near future, it could be on track for a potential zero-percent increase in property taxes when budget season rolls around. 

Financial health

The county has for several years brought in more money than it has spent. 

According to the auditors, representatives from the Buffalo-based accounting firm Drescher & Malecki, revenues first outpaced expenses in 2020, and continued to do so from there. 

“This is a pretty similar trend to a lot of New York State counties,” said Montalbo. “We’ve been seeing, 2020 to 2022, the last two fiscal years we’ve seen that increase in revenues. A lot of that is due to sales tax statewide as well as some of those one-time federal funds of pandemic relief here.”

The county’s expenses jumped in 2022 to match its revenues. According to the auditors, Sullivan County invested its additional monies in one-time capital projects as well as in paying off debt early; it didn’t make long-term commitments which couldn’t be honored if revenues leveled off. 

County manager Josh Potosek described the overall of impact of higher revenues in a July/August edition of his newsletter. 

“I’m glad to report that Sullivan County is collecting more sales and room taxes than ever before, with us on track to hit our projection of $66 million in sales tax revenues alone this year,” wrote Potosek. 

“The net effect: the county’s budget no longer has to rely so heavily on property taxes, and I’m eyeing a potential zero-percent increase in land taxes for 2024 (subject to county legislature approval later this year),” Potosek added. 

Medicaid funding

The county does face challenges to its current financial position. 

This past budget cycle, New York State changed the way it handled Medicaid funding, taking money for itself that before went directly to county coffers. 

This change leaves Sullivan County with an approximate $3.5-$4 million dollar hole in its budget, according to Potosek. 

The county hasn’t determined how it will respond to the Medicaid revenue loss. It has a good amount of flexibility because of its healthy financial state, itself the result of strong sales tax revenue and years of financial prudence. 

“I think it’ll be a little bit more difficult to not raise taxes because of this [but] it’s still feasible,” Potosek told the River Reporter. “Some of the things that are out of our control such as sales tax, where pension rates go and health insurance—we don’t know any of that stuff yet to know how these pieces are going to fit into the global puzzle come the fall and when they have to adopt a budget.”

Foreclosure

Another change from New York State, this one to the county’s foreclosure arrangements, could affect Sullivan’s finances. 

When the county forecloses on a property for taxes owed, it can sell that property at a tax auction, and recover some of the money its owed. Thanks to a court case originating in Minnesota (Tyler v. Hennepin County), that system may be changing. 

“Municipalities won’t be able to keep profits from tax foreclosure sales anymore. Instead, whatever we collect at a tax auction in excess of what we’re owed in taxes and fees will have to be given to the delinquent property owner,” reads Potosek’s county manager newsletter. 

That affects the county, Potosek told the River Reporter, because the county used the profits it received from some properties to make up for the losses it incurred on others. 

Potosek estimates in his newsletter that the impact could be between $4 and $5 million per year. 

Care center

Sullivan County’s auditors pointed out one challenge in particular: its nonspendable fund balance. 

This pool of money includes debts owed to the county, but only those that didn’t look likely to be paid in the coming year—so, non-spendable. The county has just over $21 million in nonspendable fund balance, with $17 million from the county’s adult care center.

“When you look at an adult or nursing home, it’s considered an enterprise fund of the county… those are really supposed to be self-sustaining,” said Montalbo. “They’re set up as an operation to run like a business where your revenues should be able to cover your expenditures.”

The Sullivan County Adult Care Center operates currently at a loss; according to the auditors, it lost around $8 or $9 million a year, three or four years ago. While the past year wasn’t so bad, said the auditors, it needed to start making money before it could start paying the county’s debt.

Legislator Luis Alvarez commented on the adult care center after the auditors’ presentation, asking how the county could take care of its citizens.

“How can we take care of our own people?... We have an adult population growing and growing and growing; the time is going to come when we’re not going to have the money to support them, [but] we still have the legal and responsible obligation to support them.”