This year, the city of Cortland was projected to bring in about $5 million in sales tax revenue, which would have accounted for about a quarter of the city’s budget.
There is no way the city is going to get all of that money because of the unprecedented statewide stay-at-home order and shutdown of businesses, combined with a substantial drop in gasoline prices and consumption, said Mack Cook, the city’s director of administration and finance, who forecasts a dark financial future.
A New York Association of Counties analysis projects a 20% reduction in sales tax revenue, but Cook said the estimate does not take into account the recent drop in gas prices and consumption. Fuel sales account for about 25% of the county’s sales tax revenue, he said.
Gas prices in upstate New York, as of Monday were down 13.6% from where they were a year ago, the New York State Energy Research and Development Authority reports.
Oil prices fell 46% since March 3, to $25.32 a barrel from $47.18.
If gas prices stay where they are, Cook said the city will look at another 5% to 10% reduction on top of what the New York Association of Counties predicts, in other words, a reduction of about 25 to 30% in sales tax revenue.
But it’s not just fuel sales that have fallen off – cars sales as well as repairs “have pretty well dried up.”
Bars and restaurants, while open for delivery and take-out, are closed to patrons. That’s another big hit.
Far fewer people are passing through the county, whether on Interstate 81 or on vacation.
It gets worse: Nearby ski mountains closed a month early, and now the spring sports and festivals are also threatened with cancellation or postponement, which will mean less money spent in greater Cortland.
So no matter how you look at it, the city is going to take a major revenue hit. What’s not yet certain is how big a hit, because that depends “on how long this lasts,” Cook said. “That’s going to be the real key.”
This lost money is unlikely to be replaced, he said.
Once the crisis is over, people aren’t going to rush out and buy all the cheeseburgers or gallons of gasoline they would have consumed a month ago.
Those are commodities that will never have been purchased, and sales tax that will never be collected, he said.
“What’s lost is lost and stays lost,” he said.
Cook admits this is not cheerful news, which makes it very easy for him to comply with social distancing rules.
“No one wants to be around me right now,” he said.
The impact of the lost revenue is still being estimated, he said. But one thing is certain: The city’s 2020 budget is going to change.
“I think that budget is obsolete now,” Cook said, adding the mayor and city department heads are “looking at every dollar that goes out right now and every dollar that is planned to go out for the rest of the year.”
Mayor Brian Tobin said he and the city’s department heads are trying to come to grips with the financial implications, but they still don’t have definite figures.
“You can’t just throw a dart and guess,” Tobin said. “You have to look at real numbers. You can’t just make a decision. You have to synthesize information from a number of sources. …But we know it’s going to be tough.”
Neither Tobin nor Cook anticipate either the federal or state government to ride to the rescue.
They both noted that the recently passed federal aid package did not provide targeted aid to small cities like Cortland, despite Tobin’s appeals to Sens. Kirsten Gillibrand and Chuck Schumer.
There is a silver lining in this dark financial cloud: Funding for city infrastructure should not be affected. Those funds are “all secured money,” Cook said. “I do not expect the state to renege on any past grants or commitments.”