Sales tax revenue takes a hit

Ulster County’s sales tax receipts took a hit in the first five months of 2020, the result of the coronavirus pandemic that kept people at home and businesses shuttered for three of those months.

Ulster County Finance Director Burt Gulnick said the county received $50.4 million in sales tax revenue through the month of May. That amount is down $4 million, or 7.35 percent from the same timeframe in 2019 and is off 8.2 percent or $4.5 million from the $54.9 million the county anticipated receiving.

The county’s $342.28 million budget for 2020 anticipated $128.6 million in sales tax revenues. Under a revenue-sharing agreement with local municipalities, the city of Kingston receives 11.5 percent of the gross sales tax revenues while the county’s 18 towns share in 3 percent of the revenues. meaning that if that sales tax revenues don’t rebound, not only will the county budget suffer but so will the city and towns.

Revenue from the county’s 4 percent sales tax is the county’s single largest revenue stream and comprises 37 percent of all county revenues.

Gulnick attributed much of the lost sales tax revenue to the lack of vehicle sales since March, when Gov. Andrew Cuomo ordered all businesses in the state to close.

“Our biggest sales tax gener

ator is automobile sales,” Gulnick said. “In this collection period, through May, (car dealerships) weren’t open.

In April, Gulnick predicted sales tax revenues could come in at between 17 and 26 percent below budgetary

projections. For perspective, Gulnick said, Ulster County saw an 8 percent reduction in sales tax revenue during the Great Recession, which was the worst economic downturn since the Great Depression.

Beyond sales tax, Gulnick said the county could see as much as a $10 million loss in state funding and more than $2.5 million in local revenues, including County

Clerk revenues, licenses and permits, bus fare and tourism-driven revenues, including the county’s two percent occupancy tax.

He predicted the drop in that revenue, as well as cuts in state and federal aid, could result in a $34.2 million budgetary shortfall.

As a result, the county took several steps to curb spending, including instituting spending and hiring

freezes and launching a retirement incentive program for employees. In June, just shy of two months after the program was launched, 60 of the 415 employees eligible for the buyout have signed on. Employees have until Aug. 3 to sign up for the program.

Gulnick said while the decrease in sales tax isn’t as drastic as county officials had initially anticipated,

the county’s financial situation remains precarious.

“In terms of those worstcase projections, what we’ve received so far is a little better than those projections, but we’re still down 8 percent,” Gulnick said. “The caution is what going forward will happen. There has always been the potential that things could close again, you just don’t know.”

Gulnick also said his initial projections anticipated a potential 17 percent decrease in state aid. Recent memos from the state though, have indicated those decreases could be as much as 20 percent, depending on how quickly the economy rebounds, he said.