Sullivan in limbo

Everyone’s waiting on federal and state governments—people’s lives hang in the balance

By ANNEMARIE SCHUETZ
Posted 8/4/20

MONTICELLO, NY — If it feels like the entire country is pending now, you’re probably right. 

Everything seems to hinge on what the federal and state governments will do. What will …

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Sullivan in limbo

Everyone’s waiting on federal and state governments—people’s lives hang in the balance

Posted

MONTICELLO, NY — If it feels like the entire country is pending now, you’re probably right. 

Everything seems to hinge on what the federal and state governments will do. What will happen to people suddenly made homeless if protections expire? Or those unemployed, where no jobs are available?  

Counties might want to help, but they don’t even know how much aid they’re getting.

On July 30 at a special legislative meeting, Sullivan County Manager Josh Potosek laid out the usual grim economic statistics, seasoned them with even grimmer federal numbers and reminded lawmakers that they won’t have a complete picture of the situation until legislation gets decided and state and federal aid comes through.

First off, the unemployment statistics. The federal unemployment rate for April 2020 was 14.7 percent. In Sullivan County, Potosek said, it was 12.2 percent (about 3,500 initial claims). 

In December of 2008, as the Great Recession was getting going, the county had 832 people unemployed. 

Potosek predicts a 16-percent peak in the third quarter.

He brought up the GDP numbers, which had been released that day, too: a 32.9 annualized drop. While that’s not the actual rate for the second quarter, it’s a useful number if you want to do comparisons. The economy actually contracted 9.5 percent. 

In 2008-09, the economy contracted 8.4 percent, he said.

How that will impact the people of Sullivan County is dependent on federal and state aid figures. 

Nationally, Potosek said, $22.76 billion in unemployment benefits were paid out, reflecting the $600 extra payments and “the sheer number of people who are unemployed,” he said. Those payments ended Sunday, July 26 in New York.

There were also protections in place for people who couldn’t pay their rents or mortgage. Ending dates for those depend on what kind of mortgage an owner has, or whether the property is federally-backed or in private hands.

So “without further action [by the federal government], we could see some catastrophic effects nationally [and] even locally, on sales tax and even just foreclosures as people become homeless,” Potosek said. “What [the governments] do in the next two weeks will portend what’s going to happen nationally and in the state and even just in Sullivan County.”

“In 2008-09, we hit a high-water mark of sales tax of $36.4 million,” he said, reminding listeners that “every recession is different.” In 2009, “we saw a nine percent drop... and a cumulative 1.5 percent drop in 2010. This put serious consequences on county budgets.” 

It took seven years to recover.

Potosek expects a 20-percent cut in state aid. There may also be cuts to local hospitals, Medicaid cuts and more. Casino mitigation payments will resume when the casinos reopen but the timing of that is uncertain. Some budget items that the state shares have been shifted to local budgets. Fees are down with closed county offices.

He predicts between $13.8 and $27.5 million in revenue reductions in total. 

However, residential energy sales tax will generate money. People were furloughed. Departments were reorganized. “We’ve looked at and benefited about $9.5 million.”

There will probably be between $4.4 and $18 million in budget cuts, he said, saying that it will likely be in the middle.

Next year, payments will come due for public works projects. Pensions, contracts and health insurance costs are up in the air. (COVID-19 costs are being factored into a lot of health insurance projections.)  

 “A lot of what’s going to happen depends on the federal government, [the state government] and the response to COVID[-19],” Potosek said. “It’s sobering news but it gives you some idea of why we’re having difficult conversations about service levels and why we’re doing reorganizations and other things.” 

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