The amount of money local governments in New York received through their sales tax dropped by 3.9% in the first three months of 2021 compared to the same period last year, Comptroller Tom DiNapoli found in a report. 

The $4.3 billion collected was $173 million less than the period between January and March in 2020, a sign the economy remains battered by the COVID-19 pandemic. 

But there is a sign of good news, even as sales tax revenue continues to fall each quarter year-over-year as the declines become less and less steep for local governments with the economy reopening and the business picture slowly improving. 

Sales tax is key for local governments to offset need for revenue elsewhere in its budget, such as the property tax. It is a barometer for the health of the economy of a state as people are open to make large purchases. 

“Although collections remain down compared to last year, there are signs of improvement as the state continues to recover from the economic devastation caused by the COVID-19 pandemic,” DiNapoli said. “Local officials are cautioned to monitor their budgets closely because the pandemic’s trajectory and its effect on our state’s fiscal recovery remain uncertain.”

New York's economy was among the first to close in March 2020 as the COVID-19 pandemic first began to spread. The state and local governments lost billions of dollars in tax revenue as people stayed home and millions of jobs were lost. 

Joblessness has recovered since last year, though New York's unemployment rate still remains higher than the national average. 

The first quarter sales tax decline of 3.9% is still far smaller than the nosedive taken in the spring, when revenue from the tax fell 27.1% between April and June during the first surge in pandemic cases.