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DiNapoli: April sales tax collections decline over 24% after COVID-19 shutdown

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Tue, May 12th 2020 03:05 pm

Local sales tax collections dropped 24.4% in April compared to April 2019, leaving many of New York’s local governments grappling with shortfalls, according to state Comptroller Thomas P. DiNapoli. Sales tax collections totaled $1.02 billion in April.

Plummeting sales tax collections were widespread, leaving counties, cities and some other local governments short by about $327 million compared to last year. Although the first quarter of 2020 was relatively strong, March sales tax collections had already begun to show the impact of the COVID-19 shutdown – a decrease of 3.7% statewide with the largest declines downstate. The April figures show shrinking revenues for local governments throughout the state.

“The coronavirus has hurt household finances, and the April sales tax figures show how deep it is cutting into municipal finances,” DiNapoli said. “Sales tax revenues are vital for the counties and cities that are on the front lines of fighting the COVID-19 pandemic. They are the first responders and provide a safety net of services for New Yorkers. The federal government needs to provide assistance to those hit hard by this virus or the budget cuts could be severe in some communities.” 

Social distancing protocols were established with the “New York State on PAUSE” initiative, which has shuttered nonessential businesses and offices since March 22. A halt to travel, the decline in retail activity and the large and growing numbers of New Yorkers who have lost their jobs have restricted business activity.

Every county in every region of the state saw a large drop in April collections. New York City experienced a 23.1% decline, amounting to $141.8 million in lost revenues for a single month. Unknown at this time is how collections are impacted by consumers’ growing reliance on e-commerce shopping for products that are now subject to state and local sales taxes.

The least severe, though still substantial decline in sales tax collections occurred in the Mid-Hudson Region (21.5% decline). The Capital District had the most severe decline (28.8%). Outside of New York City, the state’s 57 counties had a decrease in collections of $159.5 million compared to April 2019.

In addition, 17 cities (not including New York City) impose their own general sales tax. April collections were down $5.7 million in April in aggregate compared to April 2019. Nearly every city saw large losses ranging from a decline of 20.1% in White Plains to a decrease of over 37% in Gloversville. A few cities tax only specific goods or services. Most cities, towns and villages and some school districts also rely on sales tax revenues to support their operations, through sharing agreements with their counties.

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