After growing at higher-than-expected rates for two years, Orange County’s sales tax collections slowed down the momentum at the midpoint of the year.
Sales taxes are the largest revenue source for the county, covering nearly half the annual expenses.
By the end of June, the county collected $117 million in sales tax revenue, almost the same as budgeted, according to data provided by the finance department.
Whereas for the first quarter, sales tax revenue was 17 percent higher than budgeted; for 2021 and 2022, county sales tax income was $42 million and $57 million more than budgeted, respectively.
The county trend mirrors that of New York, which saw a statewide growth rate down from almost 20 percent for the first quarter of last year to 7 percent this year, according to the latest sales tax report by the New York State Comptroller’s Office.
This might signal that the state is on track to return to its pre-pandemic levels, which had an average growth rate of 4.5 percent, the report says.
After the pandemic hit, sales taxes collected by Orange County dropped in 2020 but quickly picked up to surpass pre-pandemic levels the following year.
County sales taxes jumped to nearly $278 million last year, up by about a quarter from that of 2019.
Booming sales taxes partly led to a property tax reduction of $7.6 million in this year’s budget.
A key reason behind robust sales tax growth was inflation, especially that reflected in gasoline and motor vehicle prices, according to a report by the State Comptroller’s Office.
For Orange County, clothing stores, car dealers, gas stations, restaurants, electronic shopping, and warehouse club stores consistently rank among the top sales tax generators, according to data from the New York Department of Taxation and Finance.
Aside from the county share of the sale taxes, local municipalities, including cities, towns, and villages, also receive their due shares under a long-standing agreement with the county.
According to a tally by the State Comptroller’s Office, Orange County has one of the most generous tax-sharing agreements with local municipalities in the Hudson Valley region.
The county charges a total sales tax rate of 8.125 percent, with 4 percent to the state, 3.75 percent to the county and local municipalities, and 0.375 percent to Metropolitan Transportation Authority.
The split between county and local municipalities is about 3:1.
Of locally shared sales taxes, about 70 percent goes to towns and villages, with the rest going to three cities—Middletown, Newburgh, and Port Jervis.
For Middletown, the largest city in the county, sales taxes cover nearly a quarter of its annual expenses.
