Sales tax revenue for local governments in New York state dropped 27.1 percent in the second quarter compared to the same period last year, according to State Comptroller Thomas P. DiNapoli. Sales tax collections from April through June totaled $3.3 billion, which was $1.2 billion less than last year.
Collections for the month of June showed some improvement in most regions. Total collections were down 25.4 percent compared to June 2019, largely due to a steep decline in New York City. Most counties saw an improvement compared to the significant drops in April and May, and many had year-over-year June increases.
“Although there was a glimmer of hope in June, second quarter sales tax figures show how deep the COVID-19 pandemic is cutting into municipal finances,” DiNapoli said. “Collections are down markedly, especially in New York City, revealing the effect of the pandemic on consumer behavior. We'll be watching July closely to see the impact of the phased-in openings in different regions.”
The drop in statewide local collections would likely have been worse if not for changes implemented in 2019 related to taxing sales made by smaller vendors online. (New York already receives taxes on most sales made by the largest online retailers.) Preliminary data released by the state Department of Taxation and Finance shows the expanded collections gave local governments a substantial boost in revenue in the March 2019 to February 2020 period.
Regionally, New York City’s second quarter decline of 34.9 percent was the result of deepening declines in April (-23 percent), May (-32 percent) and June (-46 percent). While June collections data may reflect some reconciliation from prior months, New York City was clearly hit early and hardest by the pandemic and the effects have lingered longest, with more businesses still unable to reopen due to health concerns.
All regions saw their second quarter collections drop. Downstate, Long Island experienced the largest decrease outside of New York City at -24 percent, while the Mid-Hudson declined by 17.4 percent. In Upstate, declines ranged from -20.5 percent in the Southern Tier to -9.1 percent in the North Country.
Every region outside of New York City, however, saw an improvement in June. The North Country’s growth was the highest at 18.6 percent. Four other upstate regions also saw an increase in June collections overall. Even in regions where declines continued into June, the size of the decreases were not as steep. The Mid-Hudson region’s 5.1 percent drop for the month of June, however, would have been larger had it not been for an August 2019 tax rate increase that went into effect in Westchester County.
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