With the 2 percent limit on local property-tax levies in place, Comptroller Tom DiNapoli said that local governments may need to rely more on sales tax revenue to balance their ledgers.
“The positive growth last year in sales tax collections are a good sign for the economy, but continued caution is warranted,” DiNapoli said. “New York’s economy has improved over the past two years, but growth has been sluggish and unevenly distributed throughout the state. The degree to which local governments depend on sales taxes varies, but it is an important source of revenue for many. As localities adjust to the property tax cap, more may turn to sales tax revenues to fill in budget gaps.”
Up until he engineered an overhaul of the tax code in December, the long-sought property tax cap was Cuomo’s signature economic achievement.
DiNapoli today issued a report that found sales tax revenue by a combined $650 million, or 5 percent, in 2011. Though at first glance it’s good news as the economic picture brightens, that’s a slower rate than the previous year.
The strongest sales tax growth was in the flood-ravaged Southern Tier region, where residents and businesses were spurred to purchase replacement appliances and rebuild in response to storm damage.
It has also been increasingly difficult for county governments to increase their own sale tax rates. Senate Republicans, trying to reverse the state’s high-tax image, have stalled “home rule” bills in the Legislature that enable the tax increases on the local level.