Sullivan County is facing a significant sales tax shortfall that could force a property tax increase next year, county officials say.
Potential $5 Million Gap in Sales Tax Revenue
County Treasurer Nancy Buck told the legislature Thursday the county is already $4 million behind last year’s sales tax revenue and could end the year $5 million below projections. The county had originally projected $80 million in sales tax revenue by the end of the year, according to Buck.
Budget Impact and Possible Tax Increase
Dan Hust, Communications Director for Sullivan County Government, said the shortfall will affect the tentative 2026 budget.
“What that means is that we are not going to have what we thought we were going to have, and it’s going to have a direct impact on the about-to-be-proposed 2026 tentative budget. The county manager, my boss Josh Potosek, is going to be proposing that probably at the end of this month,” Hust said.
Hust said a property tax increase above the standard 2% cap is a possibility. “I’m not yet able to say exactly what that’s going to be, but we’re preparing documents right now so that the public is fully aware of what might be coming on their county tax bill in 2026,” he said.
Why Sales Tax is Falling
Officials attribute the decline to shifting shopping habits rather than an economic slowdown. “We’ve seen consumer spending continue to rise. What it is is over the past few years, starting in the pandemic, people have been doing a lot more online shopping. But that has sort of balanced out back to what I might call a historic norm,” Hust said.
Hust explained that when residents shop outside Sullivan County, the local government loses that tax revenue. “If you go to a bricks-and-mortar store in, say, Orange County like in Middletown, New York State still gets its cut of the sales tax, but Orange County now gets that sales tax. Sullivan County doesn’t get anything,” he said.
Positive Economic Signs
Despite the shortfall, Hust said other parts of the local economy remain strong.
“Our tourism continues to be very healthy. Our downtowns, many of our downtowns have never looked better. People are here and spending money, but how and when and where they spend the money, that’s what’s changed,” he said.
Looking Ahead to 2026 Budget
Hust stressed the importance of the revenue gap. “I believe…if I remember the number Josh told me, it’s around $700,000 [representing] 1% tax increase in the county. So think about that: we’re projecting to be $5 million down, plus expenses continue to rise. Our most valuable asset, our labor expenses, continue to rise and there are new contracts being negotiated for that.”
Officials plan to release more details on the 2026 budget in the coming weeks, with public hearings allowing residents to weigh in.
Image: Sullivan County Government Center in Monticello, NY. (Credit: Sullivan County Government).