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Lansing Sales Tax Revenue

The Town of Lansing's sales tax revenue exceeded projections in the first quarter of 2020. In an interview last week Lansing Town Supervisor was cautiously optimistic last week about the impact of sales tax revenue on the Town, despite reports of a 24% decline in sales tax revenue state-wide. Nevertheless LaVigne said there was reason to be optimistic, in part, because Lansing habitually estimates sales tax conservatively.  Two weeks ago LaVigne sent an email to town board members explaining how current estimates impact the Town.

"The most resent sales tax projections from Tompkins County (Jason Molina) is a 15% reduction in sales tax revenue from the previous year," LaVigne wrote. "The town of Lansing's sales tax revenue last year totaled $1,666,138.29. A 15% decrease of our sales tax revenue from last year would equal $249,920.75. 85% of last year's sale tax revenue is $1,416,217.55. Our 2020 estimate for sales tax revenue is $1,599,290.00.  If we subtract our projected 2020 sales tax revenue from the new estimated 2020 sales tax revenue the difference is a deficit of $183,072.45."

Sales and Mortgage tax revenue helps keep property taxes down, and when it exceeds projections it has often been used to fund special projects such as paving at Myers Park, or Highway Department equipment purchases.  Of $250,000 estimated mortgage tax in the Town's 2020 budget, $136,353 has been collected.  $381,362 of the estimated $1,599,290 was collected in the first quarter of this year.

A total of 988 local tax jurisdictions state-wide collect an average local sales tax of 4.228%.  Here in Tompkins County the Legislature votes on what amount of sales tax it will add to the State's 4%.  In recent memory the County has always set that figure at 4%, making tax collected on sales within the county 8%.  The State collects the full 8% and then returns half of that money to Tompkins County.  Or the portion collected within the City of Ithaca, the County keeps half, another 25% goes to help fund county programs that are related to the city such as Tompkins County Area Transit (TCAT), the Tompkins County Public Library (TCPL), Southside Community Center, and youth and Human Services.

A common misconception is that municipalities like the Village of Lansing receive all the sales tax revenue from the malls and the large cluster of businesses within their borders.  That's not true.  That money goes into the pot of sales tax collected in Tompkins County, not including the City of Ithaca.  Of the portion collected outside the city, Tompkins County keeps 75%, and the remaining 25% is distributed to the towns and villages based on their population.

A year ago New York State passed a new 'online marketplace provider' tax that the state expected to generate $540 million each year.  The law stated that any business that ships at least $300,000 worth of goods into the state or completes at least 100 transactions with New Yorkers annually would be required to collect sales tax.  State officials said at that time that the money would likely be split 60-40 between New York City and the rest of the state.

In April Forbes Magazine reported  that online sales of nonessential items were rising for some companies as much as 74% since the COVID-19 lock-downs.  Online grocery sales skyrocketed by 250% in mid-April, but many food items are not subject to sales tax.  But other online sales categories have also risen dramatically, topped by medical products rising 500%, baby products short of 400%, and cleaning products at 200%.  Most categories have seen more sales, with the exception of jewelry, fashion and apparel,auto and tools, and travel.  But these rises are evidently not enough to offset the drop in local sales tax collection.

New York State Comptroller Comptroller Thomas P. DiNapoli said Tuesday that local sales tax collections dropped 24.4 percent in April compared to April 2019, leaving many of New York’s local governments grappling with shortfalls.  He said that very county in every region of the state saw a large drop in April collections, and that plummeting sales tax collections were widespread, leaving counties, cities and some other local governments short by about $327 million compared to last year.

"The coronavirus has hurt household finances, and the April sales tax figures show how deep it is cutting into municipal finances," DiNapoli said. "Sales tax revenues are vital for the counties and cities that are on the front lines of fighting the COVID-19 pandemic. They are the first responders and provide a safety net of services for New Yorkers. The federal government needs to provide assistance to those hit hard by this virus or the budget cuts could be severe in some communities."

But DiNapoli added that rises in online sales were not factored into the drop.

"Every county in every region of the state saw a large drop in April collections. New York City experienced a 23.1 percent decline, amounting to $141.8 million in lost revenues for a single month," he said. "Unknown at this time is how collections are impacted by consumers’ growing reliance on e-commerce shopping for products that are now subject to State and local sales taxes."

In his interview last week LaVigne was cautiously optimistic about how online sales tax collection will impact the Town, saying that we'll have to wait and see. In April he said he had consulted with Highway Superintendent Charlie Purcell about possibly reducing planned road maintenance that is not essential in the coming year, and adjusting as necessary as actual revenue figures come in.  Early this month LaVigne told town board members that sales tax revenue in the first quarter was strong, and that the Town's fund balance and reserves are also in good shape.

"The first two months of 2020 sales tax revenue is $15,724.71 over the actual revenue for the first two months of last year," LaVigne said. The Town of Lansing is in a strong financial position to maintain our services to our residents and still be able to make monetary adjustments as needed due to sales tax revenue inconsistencies. Understandably, March, April and May's 2020 actual sales tax revenue will give us a much clearer picture."

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