As COVID-19 Raged On, Sales Tax Collections Took a Dive in NY Last Year

Local governments in New York collected $1.8 billion less in sales tax last year during the height of the COVID-19 pandemic compared to 2019, State Comptroller Tom DiNapoli said Tuesday, signaling a major loss for municipalities that rely on that revenue to fund services.

That represented a 10% decline in sales tax collections statewide compared to the prior year, DiNapoli’s office said in a report.

For context, sales tax collections had grown each year from 2015 to 2019 by an average of about 3.6% annually. The 10% decline experienced last year cancelled out growth from the previous two years, and has placed a tremendous strain on local finances.

DiNapoli called on the federal government to help local governments recoup their losses in a statement accompanying the report.

“Local governments depend heavily on sales taxes as a major source of revenue, but as New Yorkers stayed home and bought less in their communities during the pandemic it created significant shortfalls,” DiNapoli said. “New York’s localities need federal aid to help get through this crisis.”

The steepest decline in sales tax collections happened during the peak of the pandemic, from April through June, according to the report. During that time, sales tax collections dropped by about 27% statewide.

New York City had the largest drop in sales tax revenue last year compared to other regions of the state. According to the report, sales tax collections in the five boroughs were 18.7% lower last year compared to 2019.

Every other region of the state either experienced a slight growth in sales tax collections compared to 2019, or a decrease of less than 3%, according to the report.

While sales tax collections were down at places like restaurants and clothing stores, there were areas of the private sector where sales appeared to grow, the report said.

There was a boost in shopping from online companies, according to the report, and New Yorkers found themselves purchasing more from beer, wine, and liquor stores than the year prior.

Read the full report: https://www.osc.state.ny.us/files/local-government/publications/pdf/local-sales-tax-collections-decline-by-10-percent-in-2020.pdf