Comptroller says counties could take big hit in sales tax revenue with business shutdowns
Photo by Tom Rivers: The VFW Post is Medina is among the many places that serve food and alcohol that are currently closed to the public.
Orleans County could see a $1.7 million loss in sales tax revenue due the economic slowdown, according to a report from State Comptroller Tom DiNapoli.
The comptroller said county governments will take a hit in their sales tax revenues as many businesses are scaled back or shut down in response to the coronavirus.
The sales tax is used to fund many programs and also helps offset some of the burden with local property taxes.
Orleans County receives about $17 million a year in sales tax and shares $1,366,671 with the 10 towns and four villages in the county.
The comptroller has released a sales tax impact report, offering two scenarios. In a mild recession, Orleans would see a 3.4 percent reduction in sales or about $559,585. In a prolonged recession, the county would take a 10.2 percent hit or $1,704,954, according to the comptroller’s report.
State-wide, counties could see an estimated $2 billion loss in local sales tax revenues due to economic slowdown.
“These revenue forecasts are very troubling for local governments and property taxpayers,” said John F. (Jack) Marren, chairman of the Ontario County Board of Supervisors and president of the New York State Association of Counties. “Counties are on the front lines executing this public health state of emergency, while the state manages it and the federal government supports it financially. We’ve never seen anything like this, ever. Our personnel is exhausted, our resources are scarce, but our spirit to defeat this silent enemy remains strong.”
The report’s estimates do not account for the local workforce related revenue losses, and the costs associated with responding to the COVID-19 pandemic, NYSAC said.
“Every level of government is going to feel the impact of the COVID-19 crisis, and local governments are bracing for that loss of revenue,” said NYSAC Executive Director Stephen J. Acquario. “But we are also urging a partnership with the state as we confront the public health threat. We represent the same taxpayer at the local level and we have limited revenues. As the state enacts its operating budget, we ask for flexibility so that we can manage the fiscal impact locally. All units of government need a financial lifeline, and we will work with the state to rebuild the economy.”
The state also will take a huge hit with what could be a $10 billion to $15 billion revenue loss, Gov. Andrew Cuomo said.
As the state struggles fiscally, it is anticipated that significant state aid reimbursement cuts to counties and local government will follow, and those cuts could be significant, according to NYSAC.
Counties face a quadruple threat of declining local revenues, especially sales tax, but also mortgage recording taxes and hotel occupancy taxes; higher spending necessary to respond to the health emergency; the loss of state reimbursement; and the potential of significant losses for small businesses on main streets that could threaten jobs and the property tax base over the short to mid-term, NYSAC said in a report today.
“We cannot stress enough how uncertain any forecast is,” Acquario said. “The potential spread, severity, and duration of the virus are poorly understood, and expert knowledge is evolving.
“The extent and duration of lockdowns, travel restrictions, and other responses that protect public health but damage short-term economic growth have been increasing as policy makers and public health officials learn more. The stock market has been swinging wildly. Economic forecasters have been rushing to release unscheduled forecast revisions in an effort to keep up with events.”
