Falling gas prices could cut into local tax revenues

By Tom Rivers, Editor Posted 9 December 2014 at 12:00 am

Orleans has seen growth in sales tax, but that could stop with cheaper gas

Photo by Tom Rivers – The gas prices are getting close to $3 at the Crosby’s gas station at the corner of routes 98 and 104 in the Town of Gaines. This photo was taken Monday evening.

Consumers are getting relief at the gas pump with prices locally falling near $3 per gallon, down from prices that were closer to $4 in the spring.

Prices nationally on average have dropped below $3 for the first time since 2010. The falling gas prices could cut into the sales tax revenues for the state and county governments.

Gas is taxed 8 cents per $1 with the state and county splitting that for 4 cents each. Every time someone fills up, a few dollars is typically generated in sales tax.

But a smaller gas bill means less in sales tax.

Orleans County officials opted not to forecast higher sales tax revenues in 2015, even though the county is currently 5.4 percent ahead of the 2013 pace.

“We’re seeing gas prices drop dramatically and we could see our revenues drop dramatically as well,” Chuck Nesbitt, the county chief administrative officer, said during a county budget hearing last week.

The county has budgeted $13,785,000 in sales tax revenues for 2015, the same as in 2014. In addition, another $1,366,671 from the local share goes to towns and villages in the county.

Orleans in 2013 was about $363,000 below its sales tax budget. This year, through the first nine months, it’s up by $601,482 (from $11,111,414 to $11,712,897) for the first three quarters of the year, according to the New York State Department of Taxation and Finance.

The percentage growth in Orleans is the ninth highest of 57 counties in the state. State-wide, sales tax receipts are up 2.7 percent for the nine months, compared to 2013.

Sales tax is important for the local and state governments because it helps offset the need for other revenue, including higher property taxes. If the sales tax revenues fall, Orleans might have to either raise taxes or dip into its reserves to maintain existing services.