DiNAPOLI: MUNICIPALITIES FACING SLOW GROWTH IN SALES TAX COLLECTIONS

Local sales tax collections showed sluggish growth in 2016 compared to 2015, increasing 2.3 percent last year, according to a statement released this week by New York State Comptroller Thomas P. DiNapoli.

“Sales tax collections are a crucial, yet unstable source of revenue for local governments,” said DiNapoli. “The impact of little to no growth is felt in several regions across the state, especially in counties and municipalities that may already be struggling financially. As the year progresses, local officials will need to closely monitor their budgets should these collections slip.”

DiNapoli’s report noted total local collections increased only 0.7 percent due to a $238 million correction in the fourth quarter of 2015, which distorted New York City’s year-to-year growth calculations. After adjusting for the 2015 correction, however, collections actually increased 2.3 percent statewide and the city’s grew 2.9 percent.

The issue of projected sales tax revenue has been a hot topic within Rockland County government. During the recent debate over the 2017 budget, 10 Democrats and one Republican in the Legislature disagreed with County Executive Ed Day’s sales tax revenue projection for fiscal year 2017. Day and his six Republican allies pointed to DiNapoli’s warnings of slow sales tax growth to justify the county executive’s projection, while the other legislators voted to apportion $1.5 million more in projected revenue.

The issue appeared resolved in Day’s favor after the 11 legislators fell one vote short (11-6) of overriding Day’s veto of their amended budget. The debate reemerged last week, however, due to the need for $2.1 million in funding for a contract settlement with Sheriff’s deputies.

Though DiNapoli found modest sales tax growth in New York State overall, Rockland County fared better than most counties. Sales tax revenues increased from $197.8 million to $205.1 million in Rockland according to DiNapoli’s report, an increase of 3.7 percent.  (Note- A portion of the sales tax revenue collected by the county is distributed to village and town governments)

Additional findings in DiNapoli’s report include:

·        Regionally, the strongest sales tax growth in 2016 was in the Mid-Hudson Valley with a 2.9 percent increase and Long Island with a 1.9 percent increase;

·        Sales tax collections grew by more than 4 percent in six counties in 2016 – Chautauqua, Delaware, Jefferson, Putnam, Sullivan and Yates;

·        Central New York was the only region in the state to suffer a decline in collections, while growth in the Mohawk Valley, Southern Tier and Western New York was below one percent;

·        Eight counties experienced a decline in collections of more than 2 percent in 2016 – Cattaraugus, Chemung, Cortland, Genesee, Hamilton, Herkimer, St. Lawrence and Washington;

·        Eleven cities that impose their own general sales tax had an increase in collections. The strongest increase was for the city of Yonkers at 16.6 percent; and

·        Seven cities experienced declines in sales tax collections.

For a copy of DiNapoli’s report, visit: http://www.osc.state.ny.us/reports/economic/2016-local-sales-tax-collections.pdf. For access to state and local government spending and more than 50,000 state contracts, visit http://www.openbooknewyork.com/.

Press Release from Comptroller Tom DiNapoli’s Office. Information also contributed by The Rockland County Times