Looks like Curran is using 2008 crash as a model
Nassau County Executive Laura Curran appears to be using the 2008 stock market crash and ensuing recession as a model for what to expect during the economic crisis sparked by the worldwide pandemic.
At her daily coronavirus briefing today, Curran predicted a $260 million deficit this year in her $3.5 billion budget because of the business shutdown forced by the pandemic.
The predicted deficit included a 10 percent decline in sales tax revenues, which were budgeted to come in at $1.277 billion this year.
In 2008, after the Sept. 15 collapse of the global financial services firm Lehman Brothers, the stock market plunged. The subsequent economic downturn was dubbed the Great Recession, second only to the 1930s Great Depresssion in terms of negative financial impact and unemployment.
By the end of 2008 --- just three months later-- the Nassau budget office reported that total sales tax revenues had dropped 9 percent year over year compared to 2007. That left a $41.9 million sales tax shortfall in the 2008 budget.
Newsday is reporting the 10 percent reduction in sales taxes this year will result in a $136.3 million decline in revenues. The number is somewhat confusing because a 10 percent drop from the adopted sales tax budget of $1.277 billion would be a $127.7 million decline.
Nevertheless, at least one difference from 2008 is the extraordinary drop in oil prices over the past few days. Nassau -- and Suffolk too -- depend on sales taxes generated by gasoline purchases. The higher the gasoline price, the higher the amount of sales tax revenues. (Suffolk also has a heating fuel tax that could be impacted.)
Will the drop in oil prices further push down sales tax collections?
Martin Cantor, director of the Long Island Center for Socioeconomic Policy, doubted the price drop will have much effect on county sales tax revenues already declining from the fall off in gasoline sales.
"The stay at home rule hurts the most," Cantor said in a text message. "The economy is shut down. That is the most impactful re sales taxes"
He added, "In 2008, despite the recession. there was still an economy. There was a demand for oil."
Cantor said he thinks oil was priced in the $40s per barrel back then.
"Today the economy is shut down. There is no economic activity and no demand for oil. Also, no storage capacity for oil even if you get it for free. That's the reason for negative oil price."
At her daily coronavirus briefing today, Curran predicted a $260 million deficit this year in her $3.5 billion budget because of the business shutdown forced by the pandemic.
The predicted deficit included a 10 percent decline in sales tax revenues, which were budgeted to come in at $1.277 billion this year.
In 2008, after the Sept. 15 collapse of the global financial services firm Lehman Brothers, the stock market plunged. The subsequent economic downturn was dubbed the Great Recession, second only to the 1930s Great Depresssion in terms of negative financial impact and unemployment.
By the end of 2008 --- just three months later-- the Nassau budget office reported that total sales tax revenues had dropped 9 percent year over year compared to 2007. That left a $41.9 million sales tax shortfall in the 2008 budget.
Newsday is reporting the 10 percent reduction in sales taxes this year will result in a $136.3 million decline in revenues. The number is somewhat confusing because a 10 percent drop from the adopted sales tax budget of $1.277 billion would be a $127.7 million decline.
Nevertheless, at least one difference from 2008 is the extraordinary drop in oil prices over the past few days. Nassau -- and Suffolk too -- depend on sales taxes generated by gasoline purchases. The higher the gasoline price, the higher the amount of sales tax revenues. (Suffolk also has a heating fuel tax that could be impacted.)
Will the drop in oil prices further push down sales tax collections?
Martin Cantor, director of the Long Island Center for Socioeconomic Policy, doubted the price drop will have much effect on county sales tax revenues already declining from the fall off in gasoline sales.
"The stay at home rule hurts the most," Cantor said in a text message. "The economy is shut down. That is the most impactful re sales taxes"
He added, "In 2008, despite the recession. there was still an economy. There was a demand for oil."
Cantor said he thinks oil was priced in the $40s per barrel back then.
"Today the economy is shut down. There is no economic activity and no demand for oil. Also, no storage capacity for oil even if you get it for free. That's the reason for negative oil price."
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