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Northwest Arkansas city officials optimistic about sales tax revenue

by Tom Sissom | July 1, 2020 at 5:24 a.m.
Cash register

FAYETTEVILLE -- Local officials are "cautiously optimistic" that they have seen the worst of the economic downturn caused by efforts to curtail the spread of the coronavirus.

"March was essentially flat, and April was a little worse," Paul Becker, Fayetteville's finance director, said of the city's sales tax revenue. "We're all going to be in wait-and-see mode until we see what the new normal is."

Officials from Fayetteville, Springdale, Rogers, Bentonville, and both Benton and Washington counties said last week that they received reports on their share of local 1% sales tax revenue. The money received by the cities and counties in June reflects money from the 1% sales taxes collected in April.

According to information from the state Department of Finance and Administration, Rogers sales tax revenue from April sales dropped 19%, with the city receiving $1,401,358 in 2020 compared with $1,739,844 in 2019.

Bentonville revenue dropped almost 17%, from $1,404,541 in 2019 to $1,167,722 in 2020. Fayetteville revenue dropped 11% from $1,875,205 in 2019 to $1,663,300 in 2020. Springdale saw the only increase among the area's four largest cities, with its sales tax revenue increasing from $1,319,985 in 2019 to $1,424,156 in 2020.

Benton County reported revenue from its share of the 1% county sales tax in June at $824,971 in 2020, down by about 11% from $927,030 in the same month of 2019.

Washington County reported its share of the county 1% sales tax in June 2020 at $655,718, down by 0.7% from $660,364 in the same month in 2019.

Public health emergencies for the covid-19 virus were declared nationally and in Arkansas in mid-March, and restrictions were placed on public gatherings and on many businesses to limit the spread of the virus. April was the first full month with restrictions in place.

With Gov. Asa Hutchinson easing some restrictions in May, several city officials said they expect more stable sales tax revenue, even if not a return to levels before the pandemic.

Casey Wilhelm of Rogers said the restrictions hit the city hard because so much of its sales tax revenue comes from people spending on dining out and entertainment.

"I think it really points to the entertainment side of our economy," Wilhelm said of the drop in revenue. "The mayor was projecting as much as 22%, and I couldn't even guess what it would be."

Wilhelm said Rogers has budgeted for about $19.9 million in sales tax revenue for 2020, and city officials are looking at a "worst-case scenario" of falling short by $2 million. That can be made up in the 2020 budget year from the city's $42 million in reserve, she said.

Jake Harper, Bentonville's director of finance and administration, said he hasn't had time to dig into the details of the sales tax revenue but the overall numbers were about what was predicted.

"This is generally around what we were expecting for April sales," Harper said. "What we try to budget is about $1.2 million each month, so we're happy we're not too far off that. We hope it will be better next month."

Wyman Morgan, Springdale's finance director, said he thinks differences in the city's economic base account for the upward tick in Springdale when the other three cities saw declining revenue.

"The rest of them have what you might call optional retail," Morgan said "Ours is basic retail. Ours is more basic staples, and those things are up. People aren't eating out and grocery stores are up. You had the meat scare in April when everybody was buying up all the meat in the grocery stores. Lots of people got the $1,200 stimulus checks in April, and those people may not be buying big-screen TVs right now."

Brenda Guenther, Benton County comptroller, said the county is still ahead of last year by about 9% but budgeted for a 10% increase. The Quorum Court has been discussing budget cuts to cover a possible shortfall.

In Washington County, Treasurer Bobby Hill said officials have been considering cuts, depending on how finances look in a few months. He said the Quorum Court hasn't discussed the 2020 budget yet.

"We're just trying to monitor our spending going forward," Hill said.


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