New York state lawmakers approved legislation Thursday allowing more than 50 counties to renew local sales taxes for three years.
The bill approved by the state Senate Thursday afternoon and Assembly late Wednesday night enables counties to continue levying taxes above the 3% sales tax rate. That permission would otherwise expire at the end of the year.
The sales tax extensions were included in a special session called by Gov. Andrew Cuomo that also authorized continued mayoral control of New York City public schools for the next two years.
The New York State Association of Counties praised the sales tax extension in a tweet.
The tax extension means 53 of New York's 62 counties avoid potential holes in their fiscal 2018 budgets. S&P Global Ratings analyst Rahul Jain noted in a June 27 report that many counties are reliant on the sales taxes, with the tax comprising about a third of aggregate county revenue in the 2015 fiscal year, according to the state comptroller’s office. Jain also noted that some large cities across the state, including Albany, Buffalo, Rochester, Syracuse, White Plains and Yonkers all receive “significant” revenues from county sales taxes.
New York City, which has five counties and levies a sales tax rate of 4.5%, would also have seen reduced sales tax revenues absent the extension. S&P analyst Anne Cosgrove noted that New York City’s Transitional Finance Authority tax revenues would have declined by an estimated 15% for 2018 and 38% for fiscal years 2019, 2020 and 2021. The TFA bonds’ overall debt service coverage would also have seen declines going from 7.62 times in 2018 to 6.11 in 2021, according to Cosgrove.
Thursday’s legislation also extends for three years income tax surcharges that benefit New York City. Moody’s Investors Service analysts Nicholas Samuels and Cristin Jacoby noted in a June 27 report that the city’s annual income tax receipts would get reduced by over 60% if the measure was not extended. The personal income tax is 21% of estimated fiscal 2018 city tax revenue and the sales tax is 13%, according to Moody’s.