Internet sales are driving higher sales tax revenue in Chautauqua County, but the county’s sales tax receipts are lagging behind the rest of Western New York.

A report released Wednesday by state Comptroller Thomas DiNapoli shows Chautauqua County’s third quarter sales tax receipts increasing $600,000, or 2.9% from the third quarter receipts in 2019 while Cattaraugus County’s third quarter receipts increased $500,000, or 6.4%. Western New York as a whole saw a 3.7% increase in sales tax receipts, with Chautauqua County’s 2.9% lagging behind the rest of the region.

Sales tax receipts were one of the bigger issues in County Executive PJ Wendel’s proposed budget for 2021. During budget hearings, the Administrative Services Committee originally proposed a $2 million in the proposed sales tax receipts before changing that cut to $500,000.

Legislator Charles Nazzaro, D-Jamestown, said the reason it’s been difficult to predict the sales tax revenue is that in 2019, state law required sales tax on all internet sales. Before this, sales tax collection was only required on businesses that had physical stores in the state. So, for example, walmart.com collected sales tax in New York, however Amazon did not. Now both businesses are required to charge the sales tax.

“This is the big wrench and it’s a positive one because we’re seeing more sales tax,” he said.

New York City’s steep year-over-year decline of nearly 22 percent in sales tax revenue for the third quarter was the main driver behind the overall drop in local government collections. Nearly every other region of the state saw at least some increase over the third quarter of 2019, although these increases were not as strong as in the pre-COVID first quarter.

“The third quarter sales tax figures show a significant improvement from the 27.1 percent decline

See TAX, Page A6

From Page A5

we saw during the second quarter of this year,” DiNapoli said. “Still, collections are down, especially in New York City, and local governments are facing serious fiscal challenges. The federal government must come up with a plan on how it is going to provide financial help to local governments during this difficult time. New York is resilient, but our local governments are hurting.”

Although it is not yet clear what is driving the growth in sales tax collections outside the city, national retail sales increased by 6.4 percent in the third quarter over the same period in 2019, with particularly strong growth in building material and garden centers, sporting goods and hobby stores, and non-store (internet-based) retail.

New York City, however, was hit earliest and hardest by the pandemic, and has continued to have more restrictions on certain activities than other regions. Indoor dining, in particular, did not resume until Sept. 30, but with strict limitations. In addition, consumer spending continues to be weak and international tourism fell sharply over prior years.