As the slowing U.S. economy curtails municipal tax revenues across the country, many Hudson Valley counties, including Columbia, Dutchess and Rensselaer, are also facing sharp increases in capital spending on roads and buildings.

The dual perils of declining sales taxes, which comprise 30-50% of a county’s tax revenues, and a large backlog of urgent capital projects will likely put a growing burden on property taxpayers, especially in more heavily indebted counties that cannot borrow much money to fill the fiscal gap.

This is the most worrisome conclusion from our latest survey of 22 counties in and around the Hudson Valley, which draws on 2006 budget data compiled by the Office of the State Comptroller. Detailed comparisons of per capita levels of taxation, spending and indebtedness for all the sampled counties are available in our Budget Scorecard Database .

The region’s vibrant economy over the past several years has produced an unexpected windfall for county budget managers who rely on sales taxes and, in many cases, a levy on new mortgages to supplement property taxes as their primary source of revenues. Meanwhile, county officials have often been reluctant to spend tax dollars under a long-range plan for upgrading their aging infrastructure, preferring instead to wait until capital improvements become unavoidable. The combination of booming revenues and stingy spending have left many counties with large cash reserves, which can help to finance long-neglected investments in infrastructure projects.

The OSC data suggests there may be particular pressure to raise property taxes in three counties-- Rensselaer, Broome and Livingston-- where spending on capital improvements has been well below average for several years and debt levels, adjusted for cash reserves, are relatively high. Conversely, Greene, Delaware, Schoharie and Washington counties owed relatively little money, net of reserves, through 2006 and appear to have invested consistently in their public infrastructure.

In Columbia County, where taxes per resident are among the highest in the region, rapid growth in property taxes and debt over the past few years have created a sizable reserve fund. The fund, which amounted to over $26 million at the end of 2007, according to County Treasurer Kenneth Wilber, is nearly enough to cover the $30 million in capital improvements expected over the next three years, including a major expansion of the county’s courthouse and construction of a new headquarters for its Social Services department. Columbia’s below average indebtedness, even after a recent$7.5 million bond issue, gives the county some leeway to borrow additional funds if sales taxes and other revenues drop more drastically than anticipated.

Art Baer, the newly appointed Chairman of the Columbia County Board of Supervisors, hopes that the county’s large reserve fund and solid balance sheet will allow him to take a more considered approach to major spending decisions.

“I want to take a longer view of our capital requirements,” Mr. Baer said. “We have a number of large projects that we’re trying to prioritize and figure out how to fund them without resorting exclusively to property taxes.”

County leaders are in the early stages of developing a strategic plan to streamline financial operations and improve capital budgeting, Mr. Bear said, adding that “We want to produce a plan that minimizes property taxes while maintaining the level of services are residents have come to expect and deserve.”

Columbia is far from alone in its legacy of under-spending on capital improvements. Averaging OSC data on capital outlays for the five years from 2002-2006 indicates Columbia spent 36% less per resident than the average of the 22-county sample while Dutchess allocated 44% less money and Rensselaer 53% less than average on capital projects. Topping the list of apparent under-spending are the counties of Madison (78% less than average), Saratoga (70% less) and Broome (86% less). The highest capital budgets over the period came from Putnam (81% more than the average), Warren (121% more) and Delaware, which spent nearly four times the average per capita amount on infrastructure.

Rensselaer, with a relatively light tax burden, and Dutchess, where taxes per resident are about average, will both need to raise debt from 2006 levels in order to catch up with the capital spending patterns of their peers, the OSC data suggest.