To no one’s surprise, the slowdown in economic activity related to the COVID-19 pandemic has resulted in a drop in sales tax revenues. New York State Comptroller Thomas DiNapoli reported that local sales tax collections dropped 24.4% percent in April 2020 compared with April 2019.
For municipalities as well as the state government sales tax collections are a significant revenue source. DiNapoli said that the decline has left many of New York’s local governments grappling with shortfalls.
Sales tax collections totaled $1.02 billion in April, leaving counties, cities and some other local governments short by about $327 million compared with last year, according to DiNapoli. 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 with a decrease of 3.7% percent statewide. There were larger declines in the downstate area.
At the same time, however, the Mid-Hudson region showed the least severe decline of 21.5%.
In comparison to a year earlier:
• White Plains dropped from $3.7 million to $3 million;
• Mount Vernon dipped from $1.7 million to $1.2 million;
• New Rochelle declined from $2.3 million to $1.6 million; and
• Yonkers fell from $7.6 million to $5.3 million.
Westchester County was at $38.1 million, down from the $41.8 million collected in April 2019. Rockland County fell from $16.5 million to $11.5 million. Dutchess dropped from $15 million to $10.9 million. Putnam County was down from $4.7 million to $3.6 million.
Outside of New York City, the state’s 57 counties had a decrease in collections of $159.5 million compared with April 2019. New York City experienced a 23.1 percent decline, amounting to $141.8 million in lost revenues for a single month.
DiNapoli’s report said that it is unknown at this time how sales tax collections are impacted by consumers’ growing reliance on online shopping. Major internet commerce sites now collect state sales taxes.
“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.”