First quarter sales tax revenue down statewide, but up a bit in Niagara Region

May 8—While sales tax collections statewide were down in the first quarter of 2021, the outlook in the Niagara Region was a little bit brighter.

State Comptroller Thomas P. DiNapoli says that sales tax revenue for local governments in New York declined by 3.9 percent in the first quarter compared to the same period last year. Sales tax collections from January through March totaled $4.3 billion, which was roughly $173 million less than the first quarter of 2020.

"Although collections remain down compared to last year, there are signs of improvement as the state continues to recover from the economic devastation caused by the COVID-19 pandemic," DiNapoli said.

But the comptroller warned local municipalities to "monitor their budgets closely because the pandemic's trajectory and its effect on our state's fiscal recovery remain uncertain."

Niagara County bucked the statewide trend, with sales tax collections up slightly in the first quarter of 2021 when compared to the same period in 2020. The county took in $17.9 million in sales taxes from January through March, compared to $17.7 million in that period last year.

County Manager Rick Updegrove noted that the first quarter sales tax collections last year were largely "pre-pandemic."

"Stimulus money is making its way into the economy," Updegrove said of the current collections numbers. "Many of our small businesses are still struggling, but the easing of some restrictions is helping."

While the county's first quarter sales tax revenue was up a bit, Niagara Falls' collections were down a bit. In a presentation to City Council members, Controller Daniel Morello said the city's share of county sales taxes amounted to $2.336 million.

In the same period of 2020, the collections were $2.403 million.

HRU (hotel, restaurant and utility) sales tax revenue was also down slightly in the first quarter from 2020 levels. The city took in $1.387 million in HRU collections this year, while banking #1.569 million last year.

Morello did note that the figures he was presenting were unaudited and could be subject to change.

Mayor Robert Restaino reminded the council that the 2020 first quarter sale tax collections were largely complete before the full effects of the pandemic were felt.

"I think it will be important to see what the April and May (2021) numbers look like," the mayor said.

Both the city and county reached their 2020 sale tax revenue budget projects, despite the pandemic, based largely on the state's new collection of sales taxes from online purchasing. It's a trend that Updegrove believes will continue.

"A large portion of that (sales tax) revenue is from online transactions," he said. "The $17.9 million (collected so far) is consistent with our projections. We are cautiously optimistic that as the economy improves and people return to work, we should easily meet our projections."

The first quarter of 2021 is the fourth quarter in a row that overall collections have dropped statewide year-over-year. From April 2020 through March 2021, statewide local collections are down by 11.8 percent or $2.2 billion.

Despite the first-quarter decline, collections have shown a gradual improvement over the past three quarters, especially compared with the 27.1 percent decline seen from April to June 2020, when many businesses were shut down during the first wave of the COVID-19 pandemic and many people stayed home to avoid infection.

"I think the second quarter will be a pretty fair bellwether for the rest of the year," Updegrove said.