Suffolk County, home to the Hamptons, is the summer playground for some of Wall Street’s wealthiest. But the coronavirus pandemic is exposing the government’s fragile finances and tipping it into a budget crisis.

The Long Island county of 1.5 million people, which spans about 85 miles (137 kilometers) from Melville to Montauk, relies on sales taxes for almost half of its $3.2 billion budget. With stores and restaurants shuttered and unemployment at a record high, sales-tax revenue plummeted almost 27% in April, according to the state comptroller’s office.

County executive Steve Bellone’s 2020 budget assumed that sales-tax collections would increase 3.7% from 2019. Now, a fiscal task force appointed by Bellone projects a revenue shortfall of as much as $590 million if there’s a second wave of the virus. There’s no cash in its rainy day fund to cushion the blow.

“Given the absence of reserves, the county was poorly prepared for an economic downturn, much less the current economic dislocation,” said Shannon McCue, a Fitch Ratings analyst.

The cities and counties that are seeing the earliest financial hits from the economic meltdown are those that rely on taxes from personal income, retail sales and tourism, all of which are tumbling because of the downturn. Local governments that draw mostly on property taxes are far more insulated because assessments are set before the current budget year.

In Ohio, where cites depend heavily on income taxes, Cincinnati and Dayton furloughed more than a quarter of their workforce. In Tulsa, Oklahoma, where sales taxes make up almost two-thirds of revenue, the city is furloughing 1,000 employees for 17 days through December.

Suffolk County, where the median household income was about $100,500 in 2018, was one of the first municipalities downgraded by credit-rating companies in March as states began shutting non-essential businesses to contain the pandemic. That month, Fitch and S&P Global Ratings lowered Suffolk’s rating to BBB+, the third-lowest investment grade. Both took the unusual step of also downgrading short-term debt issued by the county in 2019.

Derek Poppe, a spokesman for Suffolk County Executive Steve Bellone, didn’t respond to a call and emails seeking comment.

Bellone, a Democrat, has declared a fiscal emergency, giving him the power to withhold portions of each department’s budget. Bellone has also proposed diverting $44.4 million from a sewer reserve fund. The county received $257 million under the CARES Act, the federal government’s coronavirus relief package.

Suffolk is eligible to borrow as much as $541.4 million from a $500 billion credit line for municipalities created by the Federal Reserve. The county already relies heavily on cash flow borrowing to pay bills before tax receipts arrive. Suffolk planned for $615 million in short-term borrowing this year, an 11% increase over 2019.

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