As Nassau County neared a phase-by-phase reopening of nonessential businesses, county Comptroller Jack Schnirman released a report last week that analyzed projected sales tax losses, as a result of the shut-down that began in March in response to the novel coronavirus. The report also ran stresses based on possible outcomes if the Covid-19 virus were to recur later this year.
“The county currently depends on sales tax for 40 percent of its revenue,” Schnirman said, calling the losses already sustained as a result of business closures “really troubling.”
According to Schnirman, the report showed that in a best-case scenario, the county is already facing losses of 12.25 percent for the year, or more than $156 million. In a worst-case scenario, the report posited losses in sales tax revenue of more than 28 percent, or $360 million, for 2020. In the event of a recurrence of the virus, Schnirman said losses for the two fiscal years 2020-21 could amount to between $665 million-$1 billion.
The largest source of sales tax for the county is retail, at 58.4 percent. Accommodation is next, accounting for 11.4 percent. Automobile dealers, retail clothing and gasoline stations account for 40 percent of retail activity in the county — businesses that have been at nearly a standstill in the past nine weeks.
“Covid-19 has dealt the county economy an unprecedented gut punch, and these numbers show the potential effect on county government,” Schnirman wrote in a statement. “Based upon our available data, our new sophisticated modeling tool currently projects worse consequences than previously anticipated.”
The extent of the losses would depend largely on the timing and pace of reopening, Schnirman said on releasing his agency’s report. With more than 2 million New Yorkers currently unemployed, he thought it unlikely that restarting the economy could be quick or seamless. “We’re in no position to make predictions about that,” Schnirman said, adding that the role and responsiveness of the federal government would also be crucial in determining outcomes.
On a more positive note, the county’s solid financial condition, reflected in its high investment-grade credit rating; its ability, restored in this year’s state budget, to capitalize on the Nassau Independent Finance Authority’s even higher credit rating to borrow at lower rates; and its almost limitless tax base, giving it the ability to bond far beyond any currently imaginable scenario suggested the county would be able to weather the fiscal typhoon, however painful the process might be.