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 t

ALBANY—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 a report released today by New York 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 approximately $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. He later added, “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 non-essential 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%). 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 more than 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.

The New York State Association of Counties announced on May 8, counties received their first installment of sales tax directly related to the first month where the statewide lock down on economic activity was in effect. In aggregate, the county sales tax collections compared to the same period last year were down about 26%. This ranges from about 16% to nearly 37% by county (not including tax rate changes).

The new sales tax data bolster the estimates made under the “severe recession” scenario outlined in NYSAC’s recently updated “Coronavirus Economic Impact on Counties” report, which projected decreases of 22% over the next year.

NYSAC notes that this is a rapidly developing economic situation and revenue conditions could change in either direction quickly.

“These new numbers lend extra weight to what we were already predicting, that the bottom has fallen out from under local governments just as they’re beginning to gain ground against the Coronavirus and making plans for reopening,” said NYSAC President John F. Marren. “Counties will continue to work with our state and federal partners to secure the funding necessary to maintain essential services and build the foundation for a resilient recovery.”

These numbers come on the heels of an updated report released recently on the economic impact of the Novel Coronavirus on New York’s counties that projects potentially catastrophic drops in revenue between $1.5 billion to $3.6 billion over the next year.

The report details how counties face a quadruple threat of:

• Declining local revenues, especially sales tax, but also hotel occupancy taxes, mortgage recording taxes, gaming revenues, among other revenues;

• Higher spending necessary to respond to the health emergency and meet the state’s requirements for reopening;

• The loss of state reimbursement; and

• The potential of significant losses for small businesses on our main streets that could threaten jobs and the property tax base over the short to mid-term.

“This is having an immediate and dramatic impact on local government operations as county officials assess cash flow needs and update their revenue projections for the coming year,” NYSAC Executive Director Stephen J. Acquario said. “Counties are reviewing all options, including hiring freezes, workforce furloughs and temporary layoffs, delaying infrastructure projects, halting new procurement and other essential and non-essential services and community improvements, among other cost savings measures—all while addressing the public health and safety emergency before us.”