WNY braces for more economic hardship with border closing

Tourism and sales tax revenues "devastated" by loss in Canadian visitors

Mike Baggerman
July 15, 2020 - 3:00 am

    BUFFALO, N.Y. (WBEN) – Officials in Western New York were not exactly surprised by Tuesday’s announcement that the borders will remain closed until August 21 but acknowledged a harsh reality: another month without Canadian travelers will mean more losses in sales tax revenues.

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    Canadians spent at least $59 million last year alone in Niagara County. John Percy, President and CEO of Destination Niagara USA, said these numbers are only indicative of travelers who used a Visa card.

    “That number is large and impactful to this community,” Percy said. “It’s devastating because they really do shop in our stores and I don’t think people realize how much they impact the local community in sales tax off of those goods and services.”

    Niagara Falls is expected to lose anywhere from 20 to 25 percent of its sales tax revenues because of the pandemic according to Mayor Robert Restaino. It’s unclear what percentage of sales tax revenues come directly from Canadian visitors and from the community. The most recent data from the City of Niagara Falls shows only $500,000 in sales tax was generated in May. In comparison, the same month last year generated close to $750,000.

    CTV first reported the border will remain closed until August 21. The border has been closed since March and was supposed to open next Tuesday until the extension was reported.

    “Certainly, the Canadian tourist is certainly a part of our tourist hospitality economy but I think it goes even deeper than that,” Mayor Restaino said. “It’s really like a neighborhood. There are folks on both sides of this river that enjoy the other side just as a matter of course – a restaurant you may like here or there or a shopping opportunity here or there – There’s a constant transport between the two sides. It’s almost as like it’s one big neighborhood and half the neighborhood has been cut off.”

    The City of Buffalo may not be as prevalent of a tourism destination as Niagara Falls, though Visit Buffalo Niagara President and CEO Patrick Kaler said that there are about 1.6 million people who enter this region from Canada each year from June to August. There’s more than one million people who come in August and September. Kaler described the extended closure as having a devastating effect.

    “We know that a lot of those people are workers as well but so many of those people are visitors who come and spend money who go to the mall, stay in our hotels and restaurants, our cultural activities,” Kaler said.

    Slightly less than half of the tourists who come to Buffalo are from Canada.

    “This is the time when we are really cranking in our summer season,” Kaler said. “It’s going to take several years (to recover). The estimation is we will not be back to 2019 levels until probably 2022 or 2023.”

    Erie County Comptroller Stefan Mychajliw last week unveiled the latest sales tax figures for the county. It shows a decrease in sales tax revenue of 16 percent in the first quarter. From March to May this year, Erie County brought in $172 million in sales tax revenue. Last year during the same time, it was more than $204 million.

    “This is a significant hit to the Erie County budget because this is our largest source of revenue,” Mychajliw said of the sales tax factor. “Because we are down significantly in sales tax revenue and it was scheduled to go up pre-pandemic, the county is going to have to make some very difficult choices when it comes to balancing the budget. We have to balance the budget and we’re going to have some difficult choices that come our way because of the reduction in sales tax.”

    Mychajliw recommends a “safe and smart” reopening of the economy. He said he’s not happy about the border being closed and said it should be opened up while we still protect those who are most vulnerable to coronavirus.

    “In many respects, the cure is worse than the disease and I’m not happy about it,” Mychajliw said.

    The decision to keep the border closed appears to be favored by the Canadian government due to the rising number of coronavirus cases in the United States.

    Coronavirus hospitalizations in Western New York remain relatively low compared to its late-April peak. However, the number of local hospitalizations has increased for each of the last six days and currently stands at 51. At its worst, the Western region had 263 people hospitalized.

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