In Erie County, 40 percent of its 2018 revenues came from the sales tax. Onondaga County's sales tax share was nearly 43 percent. And Broome County's sales tax accounted for more than a quarter of the cash it took in that year. 

The coronavirus pandemic has created a significant budget problem for county and local governments that rely on sales taxes as a source of revenue as commerce drew to a standstill in mid-March and the economy is slowly reopening over the last several weeks in New York, a report released this week by Moody's found. 

What You Need To Know

  • Some county and local governments rely heavily on sales tax revenue.

  • That revenue has largely disappeared during the pandemic, a report from Moody's found.

  • This, in turn, could lead to service cuts and layoffs.

  • The economic reopening could help generate revenue, however.

The result for taxpayers? Cuts to services, deeper debt, or higher taxes. 

The problem is more profound for city governments like Rochester if they were already experiencing financial trouble prior to the pandemic. Small town governments like Malta in Saratoga County, for instance, receive a share of sales tax from its county — close to 63 percent of its revenues in 2018. 

"More importantly, state aid to their school systems, which are component units of each city, are likely to see cuts in fiscal 2021, absent federal stimulus," the Moody's report found. "Declining sales tax revenue, coupled with potential state aid cuts to school and city budgets, could put significant strain the city's finances."

And those strains are already leading to layoffs of municipal workers, which in turn will lead to a cycle of people spending less money in the economy. 

Governor Andrew Cuomo's administration this week withheld millions of dollars in financial aid to a dozen city governments while awaiting word on direct aid from the federal government.

The aid could be key to helping some local governments weather the storm, the report found. 

Nassau County on Long Island, for instance, could be in line for as much as $750 million over the next year if one proposal is approved. 

"This level of federal funding would allow the county to manage through the current crisis with little to no need for additional cash flow borrowing," the report found. "While the Senate is not likely to pass the bill in its current form, even half of what is included in the House bill for Nassau would be significant and greatly improve its liquidity."

But approval of aid is far from certain as Congress continues to negotiate the next stimulus legislation. For now, Cuomo has not said when spending cuts on the state level will formally take effect.  

Five regions in upstate New York will be entering the fourth reopening phase on Friday, with more areas expected to follow suit next week. The reopening to at least phase 3 for some regions has been beneficial, the Moody's report found. 

State officials are delaying further openings for venues like movie theaters and gyms in order to limit the growth of the virus. 

New York is gradually re-opening businesses and organizations as the virus has reached an infection rate of about 1 percent out of the 50,000 to 70,000 tests usually conducted each day in the state.

The virus has spread elsewhere in the country, meanwhile, as rates are spiking in states like Florida and Texas. Cuomo announced a 14-day quaratine requirement on Wednesday for states with high infection rates alongside the governors of Connecticut and New Jersey.