NY Counties’ Sales Tax Revenue Slows Down After Pandemic Bump

Woodbury Common Premium Outlets in Central Valley, N.Y., on May 7, 2023. (Cara Ding/The Epoch Times)

Sales tax revenue for 57 New York counties outside the Big Apple has flattened out after an impressive growth streak during the COVID-19 years, according to a new report by the New York State Association of Counties (NYSAC).

Most of these counties rely on sales tax—as opposed to property tax—as their primary revenue source, according to the report. In Orange County, it accounts for two of every five dollars in annual governmental spending.

The report shows that, by the end of July, the combined year-to-date sales tax revenue for New York counties was just slightly less than that for the same time last year.

Thirty-one of the counties, more than half, logged negative growth rates.

Between 2021 and 2023, most counties enjoyed double-digit growth that buoyed their sales tax revenue well above their pre-pandemic levels, partly thanks to consumer spending fueled by federal stimulus checks.

A New York law requiring the collection of sales taxes for online purchases also contributed to the bump, the report states. The rule went into effect in 2019, just before the pandemic-era migration when large groups of people who lived in cities moved upstate for more open space.

In Orange County, higher-than-expected sales tax growth fattened its fund balance and contributed to property tax cuts three years in a row. When the county government was allocated $75 million in federal COVID-19 stimulus money, it had no pandemic-induced financial hole to fill and instead used the money to jumpstart new programs.

As consumers have spent down the one-time stimulus checks, the sales tax revenue has gradually wound down in a trend that has continued for about a year now, according to the report.

The cooling labor market, the predicted downward direction of the economy, and the higher-than-average housing costs in New York also affect consumer spending, according to the report.

Primary sales tax revenue generators across counties are automobile dealers, gasoline stations, electronic shopping, restaurants, and building material and supplies stores.

Orange County stands out among all, with clothing stores being the top sales tax generator, largely because of the global shopping destination Woodbury Common Premium Outlets.

New York City has an opposite sales tax story. The country’s most populous city didn’t see its sales tax revenue recover until two years into the pandemic, and several sectors are just beginning to return to pre-pandemic levels, according to the report.

By the end of July, the city’s year-to-date sales tax revenue was up by 2.6 percent from last year.

The estimated total sales tax receipts generated in New York state for this year is $42.6 billion, according to the NYSAC.

The lion’s share—$19.2 billion—will go to fund the state government; followed by $10.4 billion to New York City; $8.5 billion to upstate counties; $2.6 billion to upstate cities, towns, and villages; and $1.4 billion to the Metropolitan Transportation Authority.