Local government sales tax collections grew by 10.2% in the third quarter of 2022 compared to the same period last year, mostly driven by double digit growth in New York City. Total sales tax collections reached nearly $5.7 billion, an increase of $529 million, according to a report released today by New York State Comptroller Thomas P. DiNapoli. This is the second straight quarter that year-over-year growth did not keep pace with inflation for counties and cities outside of New York City.

“New York City’s sales tax growth in the third quarter, after relatively weaker collections in 2020 and 2021, bolstered overall growth for the state,” DiNapoli said. “Most local governments are experiencing sales tax revenue growth, even as they struggle with higher costs from inflation just like consumers and businesses. We will continue to monitor how inflation is affecting local governments and the state’s economy.”

Local sales tax collections from July to September rose by double-digits for the sixth straight quarter. However, local governments are contending with higher costs from inflation, which was 8.3% nationally. Adjusting for inflation, year-over-year growth in the value of sales tax revenue for the third quarter was about 1.8%.

New York City’s third quarter collections this year grew by 16.8% to $2.4 billion. Several of the city’s major service industries, including restaurants, as well as arts, entertainment and recreation saw increased economic activity, with hotel occupancy rates rising above 90% in September, even though business travel remains well below pre-pandemic levels. Broadway attendance continues to grow, rising above 90% of pre-pandemic levels for the first time in September.

Overall collections for the counties and cities in the rest of the state grew by 5.3% to $2.9 billion. However, when adjusted for inflation, these collections are worth slightly less than the $2.8 billion collected in the same quarter last year.

In total, 52 out of 57 counties experienced growth in collections. Lewis County had the largest increase (30.7%), followed by Sullivan (26.6%) and Schoharie (22.3%).

DiNapoli’s report notes that the third quarter collections of several counties outside of New York City were less than what they would have been had they not opted to implement a local component of the state’s “gas tax holiday.” However, this only slightly offset overall local sales tax growth, in part because taxes collected from the retail sale of gasoline typically only comprise about 5.2% of total collections for counties outside of New York City.

Four of the five counties with year-over-year declines in collections for the quarter participated in the gas tax holiday, but only two of these counties (Monroe and Wayne) experienced a steep enough drop in motor fuel sales tax revenues to cause the decrease in their overall collections.

Of the 18 cities that impose their own sales tax (not including New York City), Glens Falls had the strongest year-over-year increase at 30.8%, followed by Saratoga Springs (24.3%) and Johnstown (12.1%). Collections fell in Norwich (-11.1%) and Rome (-1.3%).

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Third Quarter Sales Taxes

Regional/County-by-County Data

Related Resources
Gas Tax Holiday Data

Inflation in the New York City Metropolitan Area

General Sales Tax Background

Wall Street’s pandemic boom came to an end in 2022, with pretax, first half profits of $13.5 billion, down 56.3% from the $31 billion earned in the same period last year, according to State Comptroller Thomas P. DiNapoli’s annual report on New York City’s securities industry.

“The last two years of profits and bonuses fueled in part by the extraordinary federal response to the pandemic were not sustainable,” DiNapoli said. “The securities sector was a buffer for state and city revenues during the pandemic. As the sector slows down in 2022, leading firms are reviewing staffing and office space needs and a prolonged downturn could negatively impact state and city coffers. Continued support for other sectors that have been slow to recover is needed to speed recovery to their pre-pandemic levels and to help offset the decline in Wall Street-related tax revenues.”

Securities industry performance is traditionally measured by the pretax profits of the broker/dealer operations of New York Stock Exchange (NYSE) member firms. There are now 126 member firms, down from more than 200 in 2007, before the global financial crisis.

The decline in revenue in the first six months of 2022 reflects multiple factors, including a 47.9% drop in income from firms’ trading, underwriting and securities activities, which were at, or near, record levels last year. Equity offerings in 2022 were at the lowest level since 2003, fueled by weaker initial and secondary public offerings. The Federal Reserve’s (Fed) multiple rate hikes beginning in March of this year to ease decades-high inflation drove interest expenses up $7.5 billion, triple the first half of 2021.

Profits so far in 2022 have returned to the range experienced prior to the pandemic. Challenging market conditions persist, and profits for the third and fourth quarters may see further declines. The Fed’s latest projections show its policy rate rising to 4.25%-4.5% by the end of the year from the current range of 3%-3.25%, further increasing interest expense liability for financial firms. OSC estimates that profits in 2022 may be closer to the 10-year pre-pandemic average of $20.3 billion per year.

DiNapoli’s report estimated the securities industry was responsible for $5.4 billion in city tax revenue in its fiscal year ending June 30, 2022 (City Fiscal Year 2022), or 8% of total tax collections. The industry also accounted for $22.9 billion in state tax revenue, 22% of the total, in the state’s fiscal year ending March 31, 2022 (State Fiscal Year 2022).

In 2020 (the most recent county-level data), the securities industry was responsible for 16% of all economic activity in the city, up from 14% in 2019. This change reflects the fact that, as the city’s overall economic output shrank by 5.2% in 2020, the finance and insurance sector output grew by 3.3%; the information sector was the only other segment that did not experience a decline. OSC estimated the securities industry’s output growth at 4.4% in 2020. However, since 2012, when Wall Street was responsible for 18% of all economic activity in the city, its contribution has declined.

Still, Wall Street’s share of the city’s economic activity exceeds that of the state’s (7.3%). Wall Street’s outsized share of the city’s economic activity is attributed to the industry’s high salaries. The average compensation for securities industry workers in New York City in 2021 was $516,560, more than five times the average salary in the rest of the private sector. This included bonuses, which averaged $257,500. Figures for median compensation for the thousands of employees in the industry are not reported.

Bonuses in 2022 are expected to fall from their record highs of 2021. New York City’s latest economic forecast estimates bonuses to decline 22%, but could fall further. Funds set aside for compensation in the industry have declined by 6.5% in the first half. DiNapoli’s annual report on Wall Street bonuses for 2022 will be released in March 2023.

The wider financial services industry, of which securities is a major contributor, is the largest office space tenant in the city. Therefore, activity in the sector also impacts property taxes, which are the largest share (43%) of city tax revenue and are forecast to provide $31.3 billion in revenue in fiscal year 2023. One-fifth of property tax revenue comes from offices. Although the financial services sector has led the return to the office, many firms are still partly working remotely. If the shift to remote work, in hybrid or whole, becomes permanent and affects real estate choices, there will be additional pressure on the city’s finances.

Preliminary figures show employment in the city’s securities industry rose in 2022, with 1,600 jobs added through September to bring the total to 181,600 jobs. Prior to this rebound, securities lost jobs during the pandemic. Employment declined by 3,500 (1.9%) in 2020 and 2021, though job losses were not as dramatic as in the total private sector, which declined by 9.8% during this period.

New York City remains the capital of the U.S. securities industry, but its share of industry jobs continues to decline. The city, which was once home to one-third of all industry jobs, now claims 17.6% of them. Its share of national firms has fallen from 6.4% in 2001 to 4.4% in 2021. Sector employment is 9.8% lower than 2000, which represented the peak for securities employment in the city.

The Comptroller’s report also notes that:

• Financial services firms reported 56% of employees were in the office on a given day in September, compared to 49% for all firms, according to the Partnership for New York City’s survey.
• The CEOs of S&P 500 finance companies based in New York state earned on average 261 times more than the median for all employees in their companies, much higher than the national average of 198 times higher.
• Industry demographics show that almost two-thirds (63%) of industry employees were White, 20% were Asian American, 8% were Hispanic and 6% were African American. Immigrants (primarily from Asia and Europe) made up almost one-third (32%) of the employees, lower than the immigrant share of all city employees (41%).
• In 2020, one in 11 jobs (nearly 9%) in the city was associated with the securities industry, a drop from one in nine in 2019. The decline likely occurred because there were fewer workers in the office to patronize restaurants, retail stores, and arts and recreation events.

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The Securities Industry in New York City

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Securities Sector Industry Dashboard