CAPITAL REGION — Sales tax revenue for local governments, including in the Capital Region, plunged in the second quarter because of the economic shutdowns in response to the COVID-19 pandemic, state Comptroller Thomas P. DiNapoli said Friday.
Statewide, sales tax collections dropped 27.1 percent for the quarter compared to the same period in 2019. Sales tax collections from April through June totaled $3.3 billion, down $1.2 billion from last year, according to a report released by his DiNapoli’s office.
The sales tax — a rough measure of economic activity, as well as a major component of most local governments’ income — took major hits in April and May. Much of the state’s retail sector was shut down to stop the spread of the coronavirus that causes COVID-19, causing unemployment to spike upward and sales receipts to drop.
But in June, many counties saw some improvement, especially those outside New York City, DiNapoli found. The counties and cities in the Capital Region and Mohawk Valley had all entered phased economic re-openings by June. Fulton, Montgomery and Schoharie counties, which began reopening a week ahead of other area counties, all showed improvements in June after steep year-to-year drops in April and May.
“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 release of the new figures came as local governments across the country continue to struggle with how to cover such unexpected revenue losses. The most recent negotiations in the U.S. Senate for a new stimulus bill reportedly do not include the $1 trillion in aid to municipal governments that the House of Representatives has already approved, leaving the situation unresolved.
Albany County, which has the Capital Region’s largest retail sector, saw its sales tax revenue for the first half of the year drop by 11 percent. County Executive Daniel P. McCoy on Thursday was among county executives from across the state calling for federal aid to local governments.
“In Albany County, comparing January through June of 2019 to the same period this year, we have lost roughly $15.5 million in sales tax revenues alone due to COVID-19 and the economic shutdown,” McCoy said during a Zoom conference organized by the state Association of Counties.
The state’s counties, which are also incurring new public health and social services costs because of the pandemic, could collectively be facing a $2 billion shortfall, according to the Association of Counties. With the state facing its own $13 billion deficit and state deficits predicted for years to come, there are also fears that state aid to local government programs will be cut.
“We need help now, and we need money that we can use without restrictions,” McCoy said.
In Saratoga Springs, the city could face another cash-flow crisis in November because of sales tax and other revenue declines, city Finance Commissioner Michele Madigan said earlier this week.
DiNapoli said the situation could have been worse in the first half of the year, since changes in state law last year meant local governments saw a boost in payments from small online vendors, who often hadn’t charged sales tax in the past, between March 2019 and February 2020. The pandemic’s impact on the economy and sales tax first began to be felt in March.
While all regions of the state saw their second-quarter collections drop, according to DiNapoli, the regions outside New York City also saw some improvement in June. Payments for any community can also be skewed — especially for smaller counties — because there are often adjustments being made by the state Department of Taxation and Finance for past over- or underpayments of estimated revenues.
COUNTY or CITY April-June 2019 April-June 2020 Percent change
Albany $73.1 million $54.9 million – 25.0
Fulton $5.4 million $5.2 million -4.0
Gloversville $900,000 $1 million 9.9
Johnstown $1 million $900,000 -12.1
Montgomery $8.4 million $7.8 million – 6.8
Saratoga $32.5 million $27.2 million – 16.2
Saratoga Springs $3.2 million $2.3 million -15.9
Schenectady $27.0 million $21.7 million – 19.6
Schoharie $3.9 million $3.8 million – 4.6