Kingston sales tax revenue plummets
The city’s most recent sales tax revenue check was nearly 31 percent smaller than the year-ago amount, and Kingston is on track to lose between $2.25 million and $3.27 million in that revenue stream for all of 2020, according to Comptroller John Tuey.
Tuey told the Common Council’s Finance and Audit Committee during a virtual meeting Wednesday that his current estimate calls for the city’s sales tax revenue to be down 21 to 31 percent for the remainder of this year compared to 2019. He said there might be some improvement in the summer and fall as the region rebounds from the COVID-19 pandemic but that it’s too early to be sure.
“There’s approximately a two-month waiting period between the sales tax period and when we actually see the money,” Tuey said. “So we’re al
ways going to be a little behind . ... So when we come out, when we open up this month, we’re not going to see these numbers until sometime in August at the earliest.”
The city’s most recent sales tax revenue check was for $576,830.46, according to information provided by Tuey. That is a decrease of $258,485.40, or 30.94 percent, from the $835,315.86 that was collected for the same time period in 2019.
The most recent check was the first to reflect sales taxes collected entirely during the coronavirus pandemic, which caused the state to temporarily close down businesses that were not deemed essential.
In his low-end estimate, Tuey said the city could lose $2,253,415 in sales tax revenue for the year. His mid-range estimate is a $2,759,733 loss, and his high-end estimate is $3,266,051.
Overall, Tuey said, the city could lose anywhere from $4,073,538 on the low end to $6,517,129 on the high end. That estimate is similar to one provided to
lawmakers last month.
On a year-over-year basis, the city already is down about $417,000 in sales tax revenue in 2020 compared to 2019, Tuey said.
The comptroller said the city still is waiting to hear about its funding from the state but has been told to expect a 20 percent reduction. He said that would equate to a $460,000 loss in revenue.
Tuey said the state is waiting to hear from the federal government before making a decision about aid to municipalities.
State aid could be a “big factor” in discussions about layoffs of city employees,
Tuey said, though he said any decision about job cuts would have to come from the Common Council and Mayor Steve Noble.
Tuey said city leaders also will have to consider how much of the fund balance they want to use to offset the revenue losses and that he has concerns about the fund balance being depleted.
The city’s unassigned fund balance is currently $7,388,676, according to information provided by Tuey. In his low-loss estimate, the fund balance could be reduced to $4,760,475, or 10.71 percent of the city’s 2020 budgeted operational
expenses. At the high end, the fund balance could be reduced to $2,316,884, or 5.21 percent.
Tuey also said the city has two employee contracts that could be settled this year, one of which is with the Kingston Police Benevolent Association. Those contracts could affect the city’s finances further, especially if retroactive pay for employees is included in the new deal, he said.
The city’s contract with the Kingston Police Benevolent Association expired at the end of December 2016 and currently is in arbitration.
Tuey said there is some
money in the city’s contingency fund to help cover part of the expense of new contracts.
The city also could suffer a $700,000 loss in parking revenue if the suspension of parking meter fees isn’t lifted before the end of the year. The city stopped charging for parking in metered spaces when the pandemic-related shutdowns started, and it will be up to the mayor to decide when paid parking resumes.