Hurricane aftermath spurs growth in downstate communities
Local sales tax collections of $14.9 billion grew by $739 million in 2013, an increase of 5.2 percent from 2012, according to a report issued today by State Comptroller Thomas P. DiNapoli. The increase outpaced annual growth rates of 3.3 percent in 2012 and 5 percent in 2011, as well as the 15-year annual average growth of 4.5 percent.
"This is welcome news for our municipalities, and comes at a time when local revenues have been experiencing little to no growth," DiNapoli said. "The majority of the increase appears to stem from storm clean up, which gives these communities a short-term boost. As the economy continues its tenuous recovery, sales tax collections could vary either way for local governments, and is generally a more volatile source of revenue."
DiNapoli's report noted growth in county sales tax collections, excluding New York City, was 3.8 percent from 2012 to 2013. Most of this growth occurred in regions downstate. On average, growth in downstate counties was 5.9 percent, while growth in upstate counties was 1.7 percent.
Regionally, Long Island saw the biggest jump in collections at 6.9 percent and the mid-Hudson Valley had a 4.2 percent increase. Among upstate regions, Western New York (2.6 percent), the Mohawk Valley (2.4 percent), Central New York (2.3 percent) and the Finger Lakes (2 percent) experienced the largest growth. The Southern Tier was the only region to see a decrease (-2.3 percent) in collections, but that was likely due to a return to normal levels following higher-than-average sales tax collections in the wake of hurricanes Irene and Lee in 2012.
In New York City, retail sales have continued to drive growth in tax collections. From 2012 to 2013, the city's sales tax collections jumped $406 million, an increase of 6.8 percent.
During this same period, sales tax collections grew in 43 of New York's 57 counties. Essex County had the highest growth rate at 8.8 percent, followed by Hamilton County at 8.2 percent, and Washington County at 6.9 percent. Several downstate communities saw significant increases due to rebuilding efforts after Hurricane Sandy. This includes Rockland County (8.1 percent), Suffolk County (6.9 percent), Nassau County (6.8 percent) and Westchester County (6.2 percent).
Despite the upward trends in most regions, the report highlighted a number of red flags for localities. For example, fourth quarter sales tax collections in 2013 marked the weakest period of growth since the first quarter of 2010. Also, 14 counties experienced overall declines in sales tax collections. The sharpest declines were in Schoharie and Tioga counties, with each suffering a 5 percent decrease.
Additional findings in the comptroller's report include:
•At the height of the Great Recession in 2009, local sales tax collections declined by 6 percent;
•Sales tax revenue made up 31 percent of all county revenues, the largest single revenue source for those entities; and
•New York City's sales tax collections improved by more than 37 percent from 2009-13.
For a copy of the report, visit: http://www.osc.state.ny.us/localgov/pubs/research/snapshot/localsalestaxcollections0214.pdf.
For access to state and local government spending and more than 50,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.