Sales Tax Revenue Bounces Back in 2021 in Tompkins County | The Salesmark

Sales Tax Revenue Bounces Back in 2021 in Tompkins County

Sales Tax Revenue Bounces Back in 2021 in Tompkins County

Tompkins County officials expect an uptick in sales tax collections to close out a year in which monthly sales tax reports have mostly outpaced figures factored into 2021’s county budget, according to a report from the county’s Finance Department.

County financial officers expect to finish the year having collected anywhere from $38 million to $39 million in sales tax, according to a presentation from Finance Director Rick Snyder during the first County Legislature meeting in December (Dec. 14). Sales tax is a source of revenue counties use to bridge shortfalls in local spending plans. In Tompkins County, sales tax revenue is a “major budget driver,” and has been used in the past by the towns of Caroline, Danby, Groton, Enfield, Newfield, and Dryden to offset potential increases to property tax bills.

“Sales tax is the second largest revenue in the county budget after property tax,” Interim County Administrator Lisa Holmes said during a special County Legislature meeting earlier this fall.

As of October, Snyder said, the county has raised approximately $33.7 million in sales tax. If the strong monthly averages in sales tax collections stay consistent, the county could be surpassing their own projections for the year.

Last year, due to the COVID-19 pandemic and the economic downturn that ensued after shelter-in-place orders from political leaders forced businesses to shut down, some counties across New York decided to opt for a more fiscally conservative approach to projecting revenues stemming from sales tax for municipalities’ budgets. In 2020, former Tompkins County Administrator Jason Molino and the County Legislature devised and approved a $182.6 million budget that projects the county would collect $34.8 million in sales tax.

“The shortfall in sales tax is millions of dollars,” Molino said at the time. “It’s significantly less than usual.”

In the county’s 2022 budget message, issued earlier this fall, Holmes said the county’s 2021 sales tax revenues are expected to match or exceed the $38.7 million in sales tax collected in 2019.

“The current rebound in sales tax revenues are likely the result of several factors, including pent up consumer demand and bolstered by additional savings after pandemic related shutdown,” Holmes said.

Despite the projected uptick in revenue, the county is budgeting for $35.8 million in sales tax for their 2022 budget.

“Following the 2021 rebound from 2020, it may seem intuitive to weight predictions for 2022 toward picking up where 2019 left off,” Holmes said. “However, a positive but more careful approach is necessary. Simply put, there are too many variables impacting the current economic outlook to confidently forecast a full swing back to the year before the COVID-19 pandemic.”

This August, the county collected its highest total funds in sales tax in a month since at least 2019, according to Snyder’s report. The state started collecting sales tax on internet purchases, which officials have touted as a huge financial boon that has beefed up monthly totals.

“Even if we collect the monthly average amount ($3.36 million) the next two months, it looks like we will be $5.5 million over the sales tax budgeted,” County Legislator Martha Robertson, D-Dryden, said during the County Legislature meeting in December. “That is remarkable. The fact that the state passed the internet sales tax when it did certainly saved our bacon. This is terrific news.”

Snyder said he has held conversations with officials from the New York State Association of Counties (NYSAC) regarding the relative sales tax rebound.

“The internet sales tax has drastically changed the whole complexion of what is being purchased and sold in Tompkins County,” Snyder said, noting that online purchases saw an uptick during the New York on-pause orders.

A county-wide sales tax rate of 4 percent is applicable to localities in Tompkins County, in addition to the 4 percent New York sales tax, according to the SalesTax Handbook. The maximum sales tax rate of 8% in Tompkins County is higher than that of 69% of New York counties, and higher than that of 69% of counties nationwide.

Snyder noted there are other factors that influence the sales tax uptick in recent years.

“Another factor is the higher cost of fuel and gasoline. Even though it is unfortunate for our residents who have to pay increased energy costs — whether it is for your car, or in your home — these cycles seem to always beef up the sales tax receipts,” Snyder said.

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