Orange County Sales Tax Growth Slows Down at Midyear Mark

Woodbury Common Premium Outlet in Central Valley, N.Y., on May 7, 2023. (Cara Ding/The Epoch Times)

After growing at higher-than-expected rates for two years, Orange County’s sales tax collections lost some momentum at the midpoint of the year.

Covering nearly half of the annual expenses, sales tax is the largest revenue source for the county.

By the end of June, the county had collected $117 million in sales tax revenue, almost equaling the amount that was budgeted, according to data provided by the finance department.

Whereas, 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 decline in the statewide sale tax growth rate to 7 percent for the first quarter this year from nearly 20 percent for the first quarter of 2022, according to the latest sales tax report from 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 states.

The Orange County Government Center in Goshen, N.Y., on Oct. 22, 2022. (Samira Bouaou/The Epoch Times)

After the COVID-19 pandemic hit, the amount of sales tax collected by Orange County dropped in 2020, but collections quickly picked up to surpass pre-pandemic levels in 2021.

County sales tax revenue jumped to nearly $278 million in 2022, up by about 25 percent from the amount collected in 2019.

Booming sales tax revenue 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 as it affected gasoline and motor vehicle prices, according to a State Comptroller’s Office report.

A JC Penney store on Route 211 commercial corridor in the Town of Wallkill, N.Y., on Jan 24, 2023. (Cara Ding/The Epoch Times)

Aside from the county share of the sale tax collections, local municipalities—including cities, towns, and villages—also receive their due shares under a longstanding agreement with the county.

In the Hudson Valley region, Orange County has one of the most generous tax-sharing agreements with local municipalities, according to a tally by the State Comptroller’s Office.

The county charges a total sales tax rate of 8.125 percent, with 4 percent due to the state, 3.75 percent going to the county and local municipalities, and 0.375 percent going to Metropolitan Transportation Authority.

The split between county and local municipalities is about 3 to 1.

Of locally shared sales taxes, about 70 percent goes to towns and villages, with the remainder 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.