Sales tax revenue for local governments in New York in 2020 dropped by 10%, a sign the COVID-19 pandemic has put municipalities around the state in a deep financial hole. 

A report released on Tuesday by Comptroller Tom DiNapoli found sales tax statewide fell $1.8 billion compared to the previous year. The steepest drop was in New York City, where the pandemic hit earliest and hardest in the country. 

Sales tax in New York City fell by 35% in the first quarter as restaurants, theaters and other gatherings closed. Elsewhere in the state, sales tax fell by 19% during that same time. 

The closure of businesses and stay-at-home orders led to a spike in an unemployment, which also led to consumers pulling back on spending. 

Sales tax is vital for local governments, especially county governments, as an alternative source of revenue to the property tax levy. State and local governments are seeking billions of dollars in aid from the federal government to make up for the lost revenue during the pandemic. 

“This report shows how deeply the COVID-19 pandemic cut into municipal finances,” DiNapoli said. “Local governments depend heavily on sales taxes as a major source of revenue, but as New Yorkers stayed home and bought less in their communities during the pandemic it created significant shortfalls. New York’s localities need federal aid to help get through this crisis.”