Yates to take hard sales tax hit
Counties received their first installment of sales tax directly related to the first month where the statewide lock down on economic activity was in effect.
According to The New York State Association of Counties, the aggregated county sales tax collections compared to the same period last year were down about 26%. This ranges from about 16% to nearly 37% by county (not including tax rate changes).
The new sales tax data bolsters the estimates made under the “severe recession” scenario outlined in NYSAC’s recently updated Coronavirus Economic Impact on Counties report, which projected decreases of 22% over the next year. Yates County Administrator/Treasurer Nonie Flynn agrees.
“Yes, I do believe the NYSAC predictions are accurate. Unfortunately, I would project our losses will be on the higher end of NYSAC’s estimate. The majority of our sales tax revenue is derived from automobile sales, gasoline revenue, retail sales, restaurants and beverage sales, all of which are suffering from the economic lockdown. However, the addition of the internet sales tax revenue will help soften the blow. Last week’s receipt was the first receipt since COVID-19 hit and we were down 36% over a year ago. This receipt did however, also reflect the AIM (aid to municipalities) payment that was taken out for N.Y.S. to pay the villages in our county. Without this diversion, we still would’ve been down 29% from last year.”
Flynn sees the actual impact on county residents if the loss is as severe as the NYSAC study predicts to be equally dire, but the legislature has taken steps to mitigate the problems.
“The impact on county residents could be potentially be a reduction in services or a tax increase. However, the legislature had the foresight since 2016 to create a budget stabilization fund. This fund was added to each year from budget surpluses with the purpose of minimizing the impact on property tax increases. Most likely this reserve fund will have to be tapped into for the 2021 budget.”
NYSAC notes that this is a rapidly developing economic situation and revenue conditions could change in either direction quickly.
“These new numbers lend extra weight to what we were already predicting, that the bottom has fallen out from under local governments just as they’re beginning to gain ground against the coronavirus and making plans for reopening,” said NYSAC President John F. Marren. “Counties will continue to work with our state and federal partners to secure the funding necessary to maintain essential services and build the foundation for a resilient recovery.”
These numbers come on the heels of an updated report on the economic impact of the novel coronavirus on New York’s counties that projects potentially catastrophic drops in revenue between $1.5 billion to $3.6 billion over the next year.
The report details how counties face a quadruple threat of:
• Declining local revenues, especially sales tax, but also hotel occupancy taxes, mortgage recording taxes, gaming revenues, among other revenues;
• Higher spending necessary to respond to the health emergency and meet the State’s requirements for reopening;
• The loss of state reimbursement; and
• The potential of significant losses for small businesses on our main streets that could threaten jobs and the property tax base over the short to mid-term.
NYSAC Executive Director Stephen J. Acquario said. “Counties are reviewing all options, including hiring freezes, workforce furloughs and temporary layoffs, delaying infrastructure projects, halting new procurement and other essential and non-essential services and community improvements, among other cost savings measures—all while addressing the public health and safety emergency before us.”