sales-tax-receipts-surge-statewide-filling-local-government-coffers

Sales Tax Receipts Surge Statewide, Filling Local Government Coffers

After receiving an extraordinary infusion of federal emergency aid, local governments across every region of the state raked in robust sales tax collections during the three months that ended on June 30th, according to a report issued Friday by the Comptroller’s Office.

State-wide, second quarter 2021 local sales tax collections rose 49 percent, or $1.6 billion, above the level collected from April-June 2020, during the depths of the pandemic. What’s more, every region of the state outside New York City collected at least 18 percent more than it did during the second quarter of 2019 – the comparable period prior to the pandemic. Specific sales tax revenue numbers for each of the state’s counties and regions can be viewed in tables accompanying the Comptroller’s report.

Friday’s data was also encouraging for the Big Apple. Local sales tax collections for New York City rose 44.6 percent relative to the year-ago quarter. While that remains 5.8 percent lower than the same period in 2019, its remarkable progress considering the unique toll the pandemic took there.

The chart below from the Comptroller’s report shows, for each New York region, how second quarter 2021 local sales tax receipts compare to the same quarter of 2020 and 2019.

The Comptroller identifies several temporary factors that likely spiked sales volume during the past quarter, including purchases related to the flood of recent home sales and the release of pent-up demand for in-person purchases. Also, implementation of sales tax revenue collection regimes for internet and intermediary taxes just prior to the onset of the pandemic lifted tax receipts from on-line purchases. On-line sales constitute a relatively higher share of purchases made by upstate residents and businesses, compared to those in New York City.

Another chart provides a longer look-back at sales tax revenue data for the past six quarters. It shows, despite the pandemic, local sales tax collections outside of New York City rose every  quarter except for the April-June 2020 period:

This illustrates how, outside of New York City, the overall downturn in sales tax receipts across the state during the past year and a half was not nearly as steep as had been feared. Sales tax receipts are a key source of local revenue—the primary such source for the state’s county governments.

It’s a major reason why the billions in emergency aid earmarked in March’s federal American Rescue Plan for local jurisdictions across New York State far exceed the amounts required to replace revenue lost from other sources.

And it’s what makes the federal emergency funds “house money” that local politicos can largely spend or invest as they see fit, within a few, limited statutory guardrails. We’ll address the disposition of those emergency funds by New York local governments in an upcoming post.

You may also like

Highlights of Albany’s Bloated and Belated Budget

The state Legislature approved the last of nine budget bills Thursday evening, 38 days after the start of the fiscal year. Here are some highlights of the fiscal impact of final spending plan: Top lines Read More

Forcing Homes to Switch to Electric Heat is not a Good Policy

  New York has some of the most ambitious climate goals in the country: electric school buses by 2035, zero emissions electricity by 2040, etc. Why New Yorkers, who already consume less energy per capita than any state (other than Rhode Island), s Read More

After Tariff Shock, Albany Should Face its New Fiscal Reality

This year, for once, state lawmakers' failure to pass a timely budget could prove to be a stroke of luck. When President Trump rolled out his on April 2, Albany leaders had not agreed on a spending plan for the f Read More

New York’s Proposed ‘MCO Tax’ Would Generate a Fraction of What Lawmakers Expected

The Hochul administration's proposed "MCO tax" would generate far less than the $4 billion in extra federal aid anticipated by state lawmakers when they approved the concept this spring, according to documents obtained by t Read More

Hochul Hides the Specifics of a Looming Tax on Health Insurance

The Hochul administration has requested federal approval for a multibillion-dollar "MCO tax" on health plans without announcing the move or providing details to the public. As by l Read More

New Yorkers’ Health Costs Spiral as Officials Take Credit for ‘Savings’

The latest round of health insurance premium hikes announced by New York regulators adds to evidence that state policies are drowning consumers instead of helping them. Late last mo Read More

Hochul’s Pandemic Review Contract Included a Gag Clause, Records Confirm

The authors of a report on New York's pandemic response are barred from discussing their findings with media under a provision of their contract with Governor Hochul's office, records obtained by the Empire Center confirm. Read More

Hochul’s Pandemic Study Is a $4.3 Million Flop

The newly released study of New York's coronavirus pandemic response falls far short of what Governor Hochul promised – and the state urgently needs – in the aftermath of its worst natural disaster in modern history. Read More