A new report from the State Comptroller found local sales tax collections across New York have slowed down over the first sixth months of 2019, compared to the same time period last year. Fortunately, Cortland County is making its way out of that trend.
The comptroller’s report found that local sales tax revenues statewide grew at a moderate pace the first two quarters of 2019, compared to the much stronger early quarters last year. Collections during the first and second quarters of 2018 grew by 3.4 percent and 3.2 percent, respectively, compared to 4.8 percent and 7.2 percent in 2017.
“Rising sales tax collections are very important for New York’s local governments. But recently, these revenues have been growing more slowly,” DiNapoli said. “These latest results should remind officials to closely watch future collections and plan accordingly.”
Most regions upstate showed weak growth.
Central New York is one of three regions that grew by 1.0% or less, along with the Mohawk Valley and North Country regions. Outside NYC, only the Southern Tier had a growth rate above the statewide average of 3.3%. Broome County had the highest year-over-year increase of 9.8%, followed by Seneca County (7.3%) and Yates County (6.8%). New York City’s collections grew 4.3%.
Cortland County’s growth rate was just under the state average at 3.1%. Still, the news is good considering the direction the numbers are heading.
The Cortland County Legislature last week distributed its quarterly sales tax revenues for the first six months of 2019 and reported a total increase of $450,000 compared to the same period last year. Consumer spending in that time is just over $15 million, up nearly a half million dollars over 2018.
According to DiNapoli, most of the economic factors that typically explain overall sales tax collections, like consumer spending and wages, did grow statewide at a modest pace. It was a decrease in gasoline prices in early 2019 that caused a decrease in the amount of taxes collected from motor fuel sales.
DiNapoli also warned that changes in state law affecting local sales tax revenues are expected during the second half of 2019.
The Fiscal Year 2019-20 Enacted New York State Budget cut $59 million in state funding for the Aid and Incentives for Municipalities (AIM) program by eliminating AIM payments to certain towns and villages.
Instead of AIM payments, these affected municipalities will get the equivalent amount of funding derived from what would have been county sales tax revenue. Additionally, sales tax sharing agreements between counties and the local governments within their borders may be influenced by these changes.
The State’s Financial Plan predicts that the $59 million fiscal impact to county governments from these payments will be more than offset by the additional sales tax revenue generated by changes intended to increase collections on internet sales.
However, this new process could affect the sales tax sharing arrangements that 46 counties have with other local governments within their borders.