Sales tax revenue for local governments in New York state dropped 9.5 percent in the third quarter compared to the same period last year, according to State Comptroller Thomas P. DiNapoli. Sales tax collections from July to September totaled $4.3 billion, or $452 million less than last year.
“The third quarter sales tax figures show a significant improvement from the 27.1 percent decline we saw during the second quarter of this year,” DiNapoli said. “Still, collections are down, especially in New York City, and local governments are facing serious fiscal challenges. The federal government must come up with a plan on how it is going to provide financial help to local governments during this difficult time. New York is resilient, but our local governments are hurting.”
New York City’s steep year-over-year decline of nearly 22 percent in sales tax revenue for the third quarter was the main driver behind the overall drop in local government collections. Nearly every other region of the state saw at least some increase over the third quarter of 2019, although these increases were not as strong as in the pre-COVID first quarter.
Although it is not yet clear what is driving the growth in sales tax collections outside the city, national retail sales increased by 6.4 percent in the third quarter over the same period in 2019, with particularly strong growth in building material and garden centers, sporting goods and hobby stores, and non-store (internet-based) retail.
New York City, however, was hit earliest and hardest by the pandemic, and has continued to have more restrictions on certain activities than other regions. Indoor dining, in particular, did not resume until Sept. 30, but with strict limitations. In addition, consumer spending continues to be weak and international tourism fell sharply over prior years.
For September, New York City saw a 43.9 percent decline in collections compared to the same month in 2019, while the rest of the state rose 19 percent. However, neither of these variations are likely indicative of a major change in September, as they may be the result of a quarterly reconciliation of distributions based on recent vendor payments.
Statewide, local sales tax collections declined by 11.8 percent, or $225 million, for the single month of September 2020 compared to the same month in 2019. So far in 2020, year-to-date (January through September), collections declined 11 percent or $1.5 billion compared to the same period last year.