“There are no good signs in our local economy right now, if you think about.”
Genesee County Manager Jay Gsell, who is paid not only to “think about” the local economy but also to “act upon” it, summed up the current situation today in light of a recent report by the New York State Association of Counties that predicts the county could lose between $1.8 million to $5.6 million in sales tax because of COVID-19.
Gsell echoed a phrase used by Gov. Andrew Cuomo in describing what looms ahead.
“I keep using the same term that I hear the governor say, ‘the new normal,’ and it’s not a good ‘new normal.’ It’s quite the mixed bag,” he said.
Full year projections in the NYSAC report estimate that sales tax revenues in Genesee County would decrease by $1.8 million – or 4.5 percent – in a “mild” scenario and by $5.6 million – or 13.7 percent – in a “severe” scenario.
In both cases, industries related to tourism, recreation and restaurants are the hardest hit.
“We’re in a shutdown through May 15 and for every two-week period, NYSAC says the numbers are going to get moved further into the higher percentage of loss,” Gsell said. “They’ve been showing us numbers in terms of the overall impact on general parts of the whole sales tax portfolio … auto buying, electronics, gas stations, and all those percentages, with the exception of grocery stores, are in the 20 to 50 percent loss as far as sales as compared to the year prior.”
Gsell acknowledged that all levels of government are facing the same adverse effects.
“Albany, obviously, is seeing this type of thing as well because they get 4 percent of the 8 percent (sales tax). The state is seeing a precipitous drop in their revenue streams, not only in terms of sales tax but also state income tax, millionaires’ tax and mortgage tax,” he said.
Most recent financial data, for December through February, was favorable for the county, Gsell said, but statistics starting in March should tell quite a different story, Gsell said.
“We know that starting this month, which is a new quarter, that the kind of numbers that NYSAC is showing us as far as the various sectors of our economy are going to be negatively impacted. Then we will foresee the same kind of implication for our local sales tax proceeds.”
Statewide, the NYSAC report estimates the total loss to county sales tax revenue in the “mild” scenario at about $350 million (excluding New York City) and in the “severe” scenario at $1 billion. Sales tax is the largest source of locally generated revenue in the average county, accounting for 43 percent of local revenue.
Gsell said he and his staff are “focusing on how to maintain some semblance of our county budget and how to deal with the issues with regard to our own workforce and the services that we provide.”
Auto sales, for example, have fallen dramatically, putting a huge dent in the sales tax budget.
“We’re basically doing just some of the mail-ins and some of the limited car sales that are occurring over the internet,” he said. “The dealers used to bring to us 60 and 70 allotments a week have trickled down to almost nothing. Something as revenue-driven as the county auto bureau under the county clerk’s office could be seeing a significant change even in the future of the kind of business that we have over there.”
He said the county is waiting for its share of the federal stimulus money to help with its weekly Medicaid costs.
“The state has gotten two of their federal Medicaid advances already since that stimulus package was voted on, passed and signed and we haven’t seen a dime yet,” he said.
Looking ahead, Gsell said he believes the recession (to whatever degree) is going to be with us through the end of the year – and he also is wary of a second bout of the coronavirus.
“If that starts to come back and they talk about another wave potentially in September, how do you go out and say, ‘Yeah, we’re not going to pay attention to that. We don’t care what the governor says and therefore, let’s have our economy start coming back,’ ” he said. “That to me is the height of folly.”
Estimated March 2020 Sales Compared to March 2019, U.S. Census Bureau
-- Motor vehicles & parts dealers -- Down 23.7 percent
-- Furniture & home furniture stores -- Down 24.6 percent
-- Gasoline stations -- Down 18 percent
-- Clothing & clothing accessories -- Down 50.7 percent
-- Sporting goods, hobby, music, etc. -- Down 22.7 percent
-- Department stores -- Down 23.9 percent
-- Miscellaneous store retailers -- Down 4.9 percent
-- Food service & drinking places -- Down 23.0 percent