Kennedy: COVID-19 has deep impact on sales tax revenue

PHOTOGRAPHER:

A report last month from the New York State Association of Counties puts a fine point on some of the 2020 economic wreckage caused by the coronavirus pandemic.

The group found that total taxable sales were off $8.6 billion from a year earlier between June and August – designated as the second quarter for state sales tax collection – which was a slight improvement from the March-to-May first quarter, when sales were down almost $25 billion from 2019.

All told for the first half, though, taxable sales were $33.5 billion lower than in 2019.

The devastation was apparent in individual business categories, too: restaurant sales off $10.3 billion between March and August, or 48 percent from 2019 levels; hotels/lodging, off $5.4 billion, or 80 percent; clothing stores, off $2.3 billion, or 56 percent.

The numbers are important to counties, according to NYSAC. While total taxable sales represent the full value of transactions, it’s the sales tax generated from those sales, shared with the state, that counties count on to help offset higher property taxes.

The group’s report is part of an ongoing series, using state tax department data, to keep counties apprised of the virus’s impact. Not only are the counties facing lost sales tax receipts, NYSAC says, but lower hotel occupancy taxes and gaming revenue, and cuts in state reimbursement, too.

A NYSAC spokesman said the next look at taxable sales numbers, for the September-to-November quarter, may be available in February. He said it was “too difficult” to predict whether the earlier quarters’ losses might be tempered even more.

The pandemic, you’ll recall, shut down much of New York’s economy between March and May – which is why total taxable sales for the first quarter are so far in the red. The second quarter saw some moderation in the decline as regions of the state and sectors of the economy reopened, but not everyone rebounded equally.

Despite the relative improvement during the summer as the spread of the virus slowed, sales tax revenue is still “far short” of budgeted amounts, Jack Marren, NYSAC president and chairman of the Ontario County Board of Supervisors, noted when the December report came out.

And with a new fall-winter infection wave, counties will again have to struggle with unbudgeted pandemic costs while keeping an eye on total taxable sales.

NYSAC, along with states and other local governments, had hoped for some relief in the $900 billion stimulus package finally passed late last month by Congress and signed by President Trump. However, the direct, unrestricted aid they wanted did not come through.

Dave Lucas, NYSAC’s director of finance and intergovernmental affairs, says a new worry is what the state will do to close its own budget gap. Writing on the NYSAC blog, he said New York is expected to “essentially confiscate” a chunk of local sales tax revenue, as it has done before.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

Categories: Business

Leave a Reply