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December 29, 2014 - 4:20pm

Low gas prices could cost local governments a total of $1 million in gas sales tax revenue

posted by Howard B. Owens in taxes, economy.

The drop in gas prices may be great for your pocketbook, but it's costing Genesee County, and other local governments, a bit of money, though the precise amount of lost revenue is dependent on how the local economy does in other sectors.

County Treasurer Scott German's back-of-the-envelope calculation is at least $500,000 in lost sales tax revenue for the county and another $500,000 distributed among the county's other municipalities, based on current gas prices.

Officials, however, expect much of that drop in revenue to be offset by increased local sales and a seemingly growing local economy.

Since the county already budgeted for a $300,000 drop in sales tax, said County Manager Jay Gsell, any decline in gas sales tax will be a soft blow.

"The level of consumer spending and consumer confidence being up in last quarter of 2014 and new retail opportunities in late 2014 and 2015 could also help stave off fuel sales decline estimated by the county treasurer," Gsell said. "Sales tax projections are not an exact science and statewide figures during 2014 have been all over the map and inconsistent."

German said there are so many variables in sales tax, it makes it hard to predict revenue, even though the sales tax on gas is a nice chunk of change for local governments.

"Who would have thunk back in August that we would be paying less than $3 a gallon for gas around the holidays?" German said.

There is a delay in transfer of sales tax revenue from the state to the county, so determining the exact amount of the revenue decline isn't possible just yet, German said.

Most of the local fuel sales is from travelers on the Thruway and fuel prices could also increase the number of travelers on the Thruway, thereby increasing gross sales tax revenue.

The county -- with its fleet of snow trucks, maintenance trucks and patrol cars -- will realize some cost savings on its own fuel expenditures, but it's too soon to get those numbers, officials said.

Batavia City Manager Jason Molino said that while sales tax accounts for 18 percent of all sales tax revenue, he's planning on either a slight increase or flat sales tax revenue.

"That's got to have an impact when one-fifth of your sales tax comes from fuel sales," Molino said, but there's also an upside to lower fuel prices that will help boost revenue.

"I was out on the west side of town before Christmas and the parking lots were packed," Molino said.

An informal survey of a handful of The Batavian's advertisers found a universal sentiment that these stores had a strong holiday sales season.

German said the impact of holiday sales won't hit the books until April. Before then, it's not possible to put a number on how well the county did in November and December, at least according to sales tax figures.

Molino said the county's low employment rate combined with one of the strongest growth rates in real wages in the state is helping to offset any drop in gas sales tax revenue.

"How long prices are going to stay ... at this low level is the bigger question," Molino said. "There's no real answer to that question. It would be nice if there was some price stability."

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