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Inflation fuels higher sales tax revenue for upstate counties

ALBANY — With inflation-driven higher prices for goods pinching the wallets of consumers, New York’s county governments saw a notable increase in sales tax collections in the first quarter of 2022, new state data shows.

The latest revenue reports show sales tax collections outside of New York City increased by 15.2% in the first quarter of 2022 compared to the same period one year earlier.

But that doesn’t mean county government officials are rolling in the dough. Prices they pay for goods and services have jumped as well from inflation rippling throughout the economy, the New York State Association of Counties pointed out.

The gains in sales tax collections stem from several factors, including inflation and pent-up consumer demand after COVID-19 restrictions were relaxed, said Stephen J. Acquario, the association’s director.

“These are volatile economic times for residents and businesses, and counties are experiencing the same unexpected growth in costs facing all New Yorkers — for everything from motor fuel to road maintenance equipment, along with skilled workforce shortages,” Acquario told CNHI.

Higher gasoline prices played a role in the increased collections. Local taxes imposed on the sale of motor fuels are a major component of local sales tax revenue, according to the state comptroller’s office, which shared the sales tax data it gleaned from the state Department of Taxation and Finance.

The data showed that most upstate counties had double digit gains in sales tax collections in the first quarter of the year, hovering near the regional average of 15.2%.

Niagara County, for instance, saw a 16% jump in the first three months of this year over the same period last year.

Otsego County raked in 12.1% more in sales taxes in the period. Chenango County’s increase was 15.9%, while Delaware County saw a 16.% jump. Schoharie County’s increase for the quarter was pegged at 15.8%

In the North Country, Clinton County’s collections rose by 10.4% in the quarter. In Essex County, the increase was 13.3%. And in Franklin County, the sales tax revenue was up by 11.9%.

For the counties, the one-year difference translates into real money.

For instance, though its gain was below average for upstate as a whole, Clinton County’s total sales tax collections for the first three months of this year represented an increase of roughly $1.5 million compared to the same period last year, according to state data.

Though collections soared in the upstate region, they were outpaced by New York City’s sales tax gains. New York City’s collections in the first quarter grew by 28.5% compared to the same period last year and exceeded pre-pandemic levels for the second straight quarter after remaining below pre-pandemic levels for most of 2020 and 2021.

The comptroller’s office noted the five boroughs have taken longer to bounce back from the pandemic than other regions of New York.

The highest gain upstate was Broome County, which saw collections rise 24.3%.

Of the cities that impose their own sales tax, Norwich in Chenango County experienced the biggest gain, with a 30.8% jump.

The comptroller’s office pointed out in its report the sales tax can be influenced by evolving economic trends, and the higher costs faced by local governments can be offset by the added revenues that come when prices on goods rise with inflation.

Many local governments primarily rely on property tax revenues to fund their services. The property tax is capped at 2% growth annually.

The state budget for the fiscal year that begins April 1 includes a temporary reduction of 16 cents per gallon on gasoline from June through December.

Local governments were also authorized to offer relief on their share of gasoline sales taxes, and some have already taken that step.

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