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AGENCY TESTIMONY
NYC Independent Budget Office Testimony on Fiscal Impact of Lifting Street Vending Permit Caps
1:34:44
·
5 min
Alaina Turnquist from the NYC Independent Budget Office presents findings on the potential fiscal impact of lifting caps on street vending permits and licenses. The analysis indicates a net positive fiscal impact on the city's budget, with the scale depending on the number of vendors becoming permitted.
- Lifting caps could result in annual net revenue gains of $5.9 million to $59 million, depending on the number of new permits issued.
- The main source of new revenue would be sales tax from permitted vendors.
- While macroeconomic impact would be minimal, individual vendors could see substantial benefits from becoming permitted or licensed.
Alaina Turnquist
1:34:44
Good morning, chairmen and members of the committee of consumer and worker protection.
1:34:49
My name is Elena Turnquist.
1:34:51
I am a lead budget and policy analyst at the New York City Independent Budget Office, also known as IBO.
1:34:58
I'm joined here today by my colleague, Eric Mosher.
1:35:01
He's a lead economist at IBO.
1:35:04
IBO is an independent nonpartisan city agency that conducts fiscal and policy research for the city.
1:35:10
Thank you for the invitation to testify today.
1:35:12
I will be speaking about the fiscal impact to the city's budget where the cap on street vending permits and licenses to be eliminated.
1:35:21
At the request of 14 city council members, IBO analyzed the fiscal impact on the city's budget that could result from lifting the cap on street vending in New York City.
1:35:29
In January of twenty twenty four, IBO published a report outlining potential impacts to city tax revenue and agency spending.
1:35:37
The report also detailed the current regulatory environment for various types of vending in New York City.
1:35:42
We found that lifting the caps on the number of vending permits and licenses would have a net positive fiscal impact on the city's budget.
1:35:52
The scale of the fiscal impact, however, would depend on the number of vendors that become permitted.
1:35:57
If 10% of people on the current vendor permit waitlists, which is around 2,000 people, were to become permitted, the net revenue gain to the city would be around $5,900,000 annually.
1:36:10
If a % of those on the wait list wait lists were to become permitted or licensed, which is around 20,000 people, the net impact would increase to about 59,000,000.
1:36:22
IBO expects that new sales tax revenue from permitted vendors would be the largest source of new revenue for the city.
1:36:30
In preparing for this testimony, IBO identified an error in our original analysis that caused an underestimate of forecasted tax revenues.
1:36:38
The January 2024 report misstated the $59,000,000 upper estimate as $17,000,000.
1:36:47
We have since updated the report on IBO's website, but it this really does not change our overall methodology or the key findings and conclusions of the report.
1:36:57
IBO expects the overall macroeconomic impact of eliminating the cap on street vendor permits would be minimal.
1:37:04
However, the macroeconomic impact to individual vendors who become permitted or licensed could likely be substantial.
1:37:11
For example, holding a legal permit or license would prevent some street vendors from receiving costly tickets or having their materials confiscated by law enforcement, assuming that other city regulations and rules are followed while vending.
1:37:26
Vendor revenues and profits overall we found were modest according to the survey data, for both permitted and unpermitted vending.
1:37:34
According to IBO analysis of vendor survey data, the average annual profit for all vendors in the city was roughly $41,000 in 2019.
1:37:43
General vendors which sell merchandise had lower average annual profits compared to mobile food vendors.
1:37:49
On average, general vendors had an estimated annual profit of around $35,000 compared to $46,000 for mobile food vendors.
1:37:59
In terms of additional administrative IBO expects additional costs would be borne by the Department of Consumer Worker Protection as well as the Department of Health and Mental Hygiene.
1:38:08
Additional, mobile food vending permits have higher administrative costs than additional general vending licenses primarily due to health department resources required to inspect mobile food vending units as to ensure food safety.
1:38:24
IBO assumed no additional uniformed agency enforcement costs would automatically result from removing the permit cap for street vending, any change would be at the city's discretion.
1:38:36
Law enforcement for vending has shifted away from criminal summons and towards civil enforcement over the past decade.
1:38:42
Importantly, even without a cap on the number of permits and licenses, vendors would need to comply with other regulations.
1:38:49
For example, strict citing rules make many streets off limits for vending even with a permit, and food vendors are required to store their vending units in city permitted commissary facilities, which have a limited capacity.
1:39:00
Therefore, while lifting the cap on permits and licenses would likely benefit many vendors and provide fiscal impact positive fiscal impact to the city overall, it is unlikely to immediately bring all street vendors into the permitted vending economy.
1:39:15
Finally, vendors must pay any outstanding fines to the city before being eligible to receive a license or permit.
1:39:22
For unpermitted vendors seeking to legalize, paying outstanding fines may present a barrier and could affect the number of individuals who would ultimately, be able to convert from informal to formal, market vending.
1:39:37
In conclusion, lifting the cap on vending permits and licenses would likely have a positive fiscal impact on the city's budget.
1:39:43
The overall scale of the impact is highly dependent on the number of vendors who are able to enter the formal permitted market as well as the type of vendors who become licensed and permitted.
1:39:53
Thank you.