ALBANY — Sales tax collections by north country counties rose more than 4 percent in 2007 over the previous year. But, the state comptroller's office warns, because the economic downturn may not have trickled down, counties relying heavily on sales tax funds need to be cautious when projecting revenue for the coming year.

In a report released Monday, the comptroller said that sales tax revenue varied widely across the state. However, the report said, "In six of the nine regions, growth in sales tax collections exceeded inflation (2.85 percent) over the time period."

"Sales tax revenues are economically sensitive," Comptroller Thomas P. DiNapoli said. "The economic downturn will likely have a significant impact on sales tax revenues. Counties — especially those that rely heavily on the sales tax — should forecast revenues conservatively. The economic roller coaster ride is far from over, and if counties want to avoid fiscal calamity, they should recognize the impact fluctuations in sales tax revenues can have on their budgets."

In the north country, Franklin County by far enjoyed the greatest percentage increase in year-over-year sales tax revenue, jumping 13.16 percent to $19.06 million in fiscal 2007 from $16.84 in fiscal 2006. Other counties' increases ranged from 0.3 percent in Lewis County to 5.21 percent in Clinton County. Regionally, sales tax collection in the six counties of the north country rose by 4.37 percent.

Part of this increase may be attributable to geography.

"A weak U.S. dollar that has attracted shoppers from Canada to certain counties along the U.S.-Canadian border," the report said.

The degree to which county and local governments rely on sales taxes varies, but overall reliance has risen over the past decade, the report said. During a recent 10-year period, New York's counties saw sales taxes, as a share of total revenue, jump to 29.6 percent in 2006 from 21.3 percent in 1996.

"Sales tax revenues now exceed the real property tax as the largest revenue source for counties," the report said.

State law permits only a 3 percent local sales tax, but 51 of 57 counties are authorized to levy above this rate, and 44 of 57 counties impose sales tax rates of 4 percent or more. In the north country, Clinton and Franklin counties levy a local sales tax of 4 percent, while Essex, Jefferson and Lewis are at 3.75 percent and St. Lawrence's rate is 3 percent.

Between Jan. 1 and March 31 of this year, regional sales tax collection increased over last year's totals as follows:

■ Clinton County, 9.9 percent.

■ Essex County, 0.2 percent.

■ Franklin County, 4.8 percent.

■ Jefferson County, 5.9 percent.

■ Lewis County, 7.3 percent.

■ St. Lawrence County, 4.9 percent.

But these increases are likely not sustainable.

"The current state of the economy suggests that New York may see a slowdown in the growth in sales tax revenues. Strong growth in the housing market early in the decade spurred a surge in new construction, building permits and housing-related purchases, which generated strong sales tax revenue. This growth has slowed dramatically. Nationally, sales tax revenues are slowing due to a decline in consumer spending, both in terms of day-to-day retail sales and home improvements, whether financed by the homeowner directly or through home equity loans."

But to some extent, rising energy costs have offset declining revenues, the report said. Rapid escalation in fuel prices has "generated significant sales tax revenue, particularly where energy costs form a significant percentage of the sales tax base," the report said.

The report, "New York State County Sales Tax Collection by Region," also noted while food prices also have increased in recent months, "most of these items are not subject to sales tax in New York." But, the report speculated, as the price of gasoline increases, consumers will be less likely to purchase larger and more expensive vehicles, which are subject to state sales tax.

"Counties must be cautious as they prepare their budgets for 2009 and beyond," the report recommended. "They should be factoring in regional differences and the inevitable decline in growth because of the slowdown of the economy. They should also make sure they understand the real historical growth rate of their sales tax, independent of the impact of the various adjustments that affect actual collections. Any forecast should also be based on a tax liability basis rather than a cash collection basis."

The full report is available online at: www.osc.state.ny.us/localgov/pubs/research/08sales

tax.pdf.