New Data Shows Counties Facing Over $3.5 Billion in Lost Revenues and Aid

The New York State Association of Counties (NYSAC) this week announced an updated and expanded economic analysis that projects counties outside of New York City losing in excess of $2 billion, factoring in sales and occupancy taxes, casino gaming revenues and other local fees. Counties are also bracing for another $1.25 billion in cuts to state reimbursement, which was signaled by the State’s Division of Budget earlier this week.

“These new numbers reflect the troubling reality we’re seeing on the ground, that with the economy in a medically induced coma, local governments are facing unprecedented declines in revenue that is their life blood of county operations,” said NYSAC President John F. Marren. “The extreme measures put in place to stop the spread of COVID-19 were necessary and right, but now local governments need help in the form of direct federal aid to continue the testing, tracing, and emergency response coordination that is crucial to defeating the virus and reopening our communities.”

This latest analysis is an update to NYSAC’s initial sales tax forecast which was done at the very start of the pandemic when little was understood about the virus or what might happen to the economy as the result of social distancing policies enacted to limit the spread of the virus.

Now, six weeks later, this revision doubles the initial sales tax loss estimate, raising the lower bound from approximately $350 million to $780 million, and raising the upper bound from $1.1 billion to $1.9 billion in projected lost sales tax receipts. This analysis also includes other key local revenue sources such as hotel occupancy taxes, casino gaming revenues and miscellaneous local fees (such as red light camera and recreation fees) that are expected to decline by hundreds of millions as well.

According to NYSAC’s analysis, which will be published in a report next week, the financial picture will darken considerably if state aid is reduced by as much as Governor Cuomo indicated may be necessary to balance the State Budget. Additional revenue losses from lower state aid could add between $620 million and $1.5 billion in additional revenue shortfalls for counties in a worst-case scenario.

“The situation we’re seeing is moving from grim to catastrophic,” said NYSAC Executive Director Stephen J. Acquario. “With widespread layoffs, shuttered business and shelter in place orders, retail sales have fallen off a cliff and taken sales tax revenue with it. In the absence of this vital revenue stream, and with potential cuts in state aid, local governments simply do not have the tools or resources to sustain operations without direct aid from the federal government.”

The upcoming NYSAC report will include the new economic data, county by county estimates and the general assumptions involved with making these new estimates.