Local sales tax collection growth accelerated in 2017, according to a
report released Monday by New York State Comptroller Thomas P. DiNapoli. Collections across the state grew by $620 million, or 3.9 percent, from the previous year, marking the highest year-over-year growth since 2013.
"This is welcome news for municipalities, as local revenues have been under significant pressure in recent years," DiNapoli said. "As 2018 unfolds, local officials would be well advised to be cautious with respect to local budgets. As we know, collections are dependent on consumer spending, and the impact of new federal tax changes on this spending is the great unknown in this equation."
DiNapoli's report found the increase in 2017 was largely driven by growth occurring in the fourth quarter (5.7 percent), which was one-third higher than growth in the fourth quarter of 2016 (3.8 percent) statewide.
For most regions, except New York City, 2017 growth was stronger than the annual average for the prior six years. New York City's increase of 4.4 percent in 2017 was less than its 2010-16 average. Its $7.4 billion in total collections accounted for 45 percent of total collections statewide and over 64 percent of those downstate.
Meanwhile, the increase in county sales tax collections outside of New York City was 3.6 percent. Sales tax collections grew in all but one of the 57 counties: Putnam County (down 0.4 percent). In contrast, Madison County had the strongest growth of 12.2 percent. However, these results were both driven by technical adjustments, which can significantly impact rates of change, especially in smaller counties. Albany, Delaware, Hamilton and Washington counties all had year-over-year growth rates of under 1 percent. In some cases, strong second half growth in sales tax collections helped counties overcome declines in the first half of 2017.
Regionally, the strongest 2017 sales tax growth was in the Finger Lakes, which increased 4.9 percent from 2016 and outperformed every other region in the state thanks to a strong year-over-year growth in the second half of sales collections for the year. Other upstate regions that performed well were Central New York, Southern Tier and Mohawk Valley, all with annual increases exceeding 4 percent. Lagging somewhat were the Capital District (2.8) and the Western New York regions (3.1).
Downstate, the Long Island and Mid-Hudson regions saw their year-over-year collections grow by 3.3 and 3.2 percent, respectively.
Additional findings in DiNapoli's report include:
•Factors that may have influenced the recent increase in collections include improved consumer confidence and stronger, though still modest, wage growth.
•New York state's unemployment rate was 4.6 percent in 2017, down slightly from the previous year and at its lowest since 2006.
•Statewide motor fuel collections increased for the first time since 2010.
•Consumer spending and retail sales conditions for the first three quarters of 2017 were steady to modest. However, the fourth quarter ended the year on a strong note.
