A long period of New York State pandemic-fueled economic expansion is over. It’s the elected governmental comptrollers who are taking the lead in telling the chief executives and the legislators that it may be time to think differently about their spending priorities.
Noting in early 2025 the abrupt slowing of 2024 state and local revenues from the sales tax, state comptroller Tom DiNapoli issued a serious warning signal. At 1.6 percent statewide in 2024, he said in late January, the rate of annual sales-tax revenue growth was the lowest except for the pandemic year of 2020 than it had been in any of the past 14 years.
Ulster County comptroller March Gallagher recently provided her perspective. “Ulster County has become increasingly reliant on sales tax as its primary revenue source,” warned Gallagher last week. “Sales-tax reliance makes the county susceptible to potential economic shocks.’’
Gallagher said that Ulster County’s collections were $175 million from that source in 2024, excluding interest. That sum was nearly $8 million above budget and a 2.8 percent increase over 2023 collections.
What raises the odds of real trouble in 2025 is not only the concerns about sales-tax revenues, but also the uncertainty caused by what the Trump administration has been doing and has been threatening to do. It appears New York is no longer his favorite state.
“Uncertainty over federal funding and the ending of federal pandemic aid creates an urgent need to strengthen the state’s fiscal position,” DiNapoli wrote in his February 14 report on the state’s executive budget. “Federal funding provides the backbone of the safety net and funds for a wide array of essential services including healthcare, education, transportation and clean-water programs. Potential cuts or significant policy changes in Washington may have a large impact on the state’s finances and on New Yorkers’ quality of life. Preserving state services and maintaining long-term budget balance will require a careful examination of the state’s spending trajectory on major programs in ways that do not harm services, but ensures their long-term fiscal viability.”
Protected by its healthy fund balance and plentiful reserves, Ulster County is in a strong short-term position. But it must shift gears and plan for the longer term.
DiNapoli reported that sales-tax collections for local governments and other local taxing entities in New York State totaled $23.4 billion in calendar year 2024, up 1.6 percent, or nearly $376 million, from the prior year. It was, he said, the lowest year-over-year rate of growth in collections since the Covid-related decline and less than half the average annual growth rate (3.8 percent) for the 2011-2019 period of recovery and expansion following the Great Recession.
New York City’s sales-tax growth rate of 2.8 percent was more robust than the state’s. Long Island revenues trailed its 2023 total by two-tenths of one percent. The mid-Hudson region was up 1.6 percent, and within it Ulster County did only a little better at 1.7 percent — some 1.2 percent behind the national rate of inflation. The Ulster sales-tax take of $174.2 million was $2.8 million ahead of the 2023 total. In the fourth quarter of 2024, according to DiNapoli, Ulster County’s collections of $43.34 million had shrunk $23,000 from the 2023 number.
Wait a moment. Gallagher said the county’s 2024 sales-tax revenues were up $8 million, while DiNapoli’s report placed the increase in Ulster County’s revenues from the sales tax at $2.8 million. If Gallagher’s number was accurate, then the growth rate was almost 4.5 percent, not 1.7 percent — far better in percentage terms than DiNapoli’s measurement of New York City’s sales-tax growth!
Gallagher explained the discrepancy. Some vendors report last-quarter sales in January and February, and these sales are recorded as the previous year’s revenues. In early 2024, those revenues came in at the expected level and were taken into account.
In December 2024, however, she explained, the number-crunchers had not anticipated the higher level of spending due to changing consumer habits, the rising employment and wage levels and the stubborn persistence of inflation. In December alone, Ulster County sales-tax revenues for December received in January and February rose more than a million dollars more than had been anticipated based on the previous year’s performance.
When the full returns for December are in, the level of actual sales-tax revenues in the state may follow the pattern of Ulster County. A communication with DiNapoli’s press office was not responded to in time for inclusion in this article.
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