CATSKILL — Online shopping and retail sales exceeded $1 billion in Greene County in 2021, with online sales fueling the 12th consecutive year of growth in county sales tax revenue.
According to the Greene County Economic Development Corporation, the county exceeded its state sales tax payments by $6.5 million last year over the level recorded in 2020.
The impact of online shopping on sales tax revenue gained prominence in 2018 when the Supreme Court’s decision in South Dakota v. Wayfair Inc. allowed the collection of taxes from the recipient online sales rather than at the place of shipment of the products. .
“This is a game-changer,” Greene County Administrator Shaun Groden said Friday. “Sales tax now applies to the receiving address, not the shipping address. It used to be that when you went online and ordered your sneakers and they came from somewhere like Philadelphia, there was no sales tax. But if you went to the mall or Walmart, there would be a sales tax. But with Wayfair, one argument is that it leveled the playing field because the internet shopping experience was previously cheaper than in-store due to sales tax. Now it’s leveled.
The court’s decision along with the collection of sales tax on internet purchases has helped fuel the county’s growth over the past two years, according to Groden.
“When you start the pandemic, for many months malls closed,” he said. “But the federal stimulus money was pushed to stimulate the economy. So people were still buying their sneakers; they just went online to do it. They did more shopping and they did it online. So you had both factors with the stimulus money and the Wayfair decision, which changed the collection mechanism. So those are two huge changes that came into effect in 2019 and 2020.”
Groden said that with federal stimulus money no longer flowing into the economy, he expects sales tax revenue to decline.
“But it’s still too close to understand what the final impact will be,” he said.
Groden noted that sales tax is the county’s largest source of revenue, with the county’s 2022 budget estimating sales tax revenue at $36 million. By comparison, the county’s tax levy is $27 million.
“So we’re very dependent on sales tax,” he said. “That’s why we created a sales tax reserve fund. Because economies work in cycles. So when we have the next downturn in the economy and our sales tax starts to suffer, we’ll have a rainy day fund to turn to in order to shore that up and not send in a huge property tax hike. to the community.
The reserve fund is designed to guard against the potential bursting of a sales tax revenue bubble in future years.
“If you go back to the economic crash of 2008-09, Greene County lost 10% of its sales tax collection in one year,” Groden said. “The bottom fell in a year. If I were to lose 10% right now, that’s $3.6 million. So we need to have a reserve fund to access, because economies always work in cycles.
Groden said Greene was in a unique position to benefit from an increase in online shopping because the county does not have a destination mall to draw consumers to.
“We don’t have a mall,” he said. “We don’t have this big mall which is a magnet like Crossgates. So I think our residents continued to shop, but they just changed the way they did it.