FAYETTEVILLE — City and county officials are pleased with local sales tax revenue through the first few months of the covid-19 pandemic, but remain concerned the continuing health crisis may hamper collections.
“I’m certainly happy with the reports we’ve had, but the report we just received is for the July sales tax, we’re still looking at a two-month lag,” Paul Becker, financial director for the city of Fayetteville, said of the most recent monthly sales tax report.
“So much does revolve around the university with the students being back and all the activity associated with that. We’re happy with the position we’re in right now, but we still have a concern for the final quarter of the year.”
All four major cities and the two counties in Northwest Arkansas reported revenue for September above what they got in September of last year.
Cities and counties receive sales tax revenue from their 1% sales tax each month. For September, the cities and counties are receiving tax revenue from the state on sales made in July. Merchants submit the tax money they collect to the state after the end of each month. The Arkansas Department of Finance and Administration calculates the amounts due to the different taxing entities and distributes the revenue, resulting in the two-month lag referred to by Becker.
Fayetteville received $2,006,983 in September, up 5.63% from the $1,899,979 the city received in September 2019.
Rogers received $1,741,989, up 1.76% from $1,711,846 in 2019.
Springdale received $1,557,361, up 16.14% from $1,340,987 in 2019.
Bentonville received $1,881,882, up 44.67% from $1,300,785 in 2019.
Benton County received $1,076,035, up 21.63% from $884,673 in 2019
Washington County received $754,190, up 10.74% from $681,018 in 2019.
Becker said the city normally receives an autumn boost from the returning students and from athletic events at the University of Arkansas; Bikes, Blues & BBQ rally;events at the Walton Arts Center; and other seasonal activity. Those activities have been canceled or curtailed because of the covid-19 pandemic.
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Sales tax revenue from activity in September won’t be reported until November.
“We certainly will not have the influx we normally see,” Becker said.
The cancellations leave the city’s sales tax revenue for the next few months in question, he said. Results from the first few months of the pandemic, which began in March, are better than he initially thought.
“I’m happy with where it is, compared to what I thought it might be in April,” he said.
Wyman Morgan, finance director for Springdale, said his city will also be affected by any downturn in economic activity from events such as Razorback football games and Bike, Blues & BBQ.
“The hotels and motels normally would be full,” he said.
Morgan said his city’s sales tax revenue has held steady for the most part and credited ongoing residential construction activity for much of that.
“The restaurants dipped down one month and then came back to normal when people worked out the details for carryout or curbside pickup,” Morgan said.
Casey Wilhelm, Rogers finance director, said the city remains on track to hit its 2020 budget goal of about $19.9 million in sales tax revenue, even with the smaller than anticipated growth in receipts.
Wilhelm said she participated in a statewide teleconference discussing sales tax revenue and other topics. She said there are indications some of the sales activity cities normally would see has been replaced by internet sales. In those transactions, the sales tax is credited to the point of delivery.
Jake Harper, Bentonville finance director, said the $1.8 million the city received from July sales was “an anomaly.”
Harper said Bentonville sales tax revenue often fluctuates because of large rebates, and the city has been cautious in the past when revenue has exceeded expectations because there may be a reduction if a large rebate is granted. The state allows businesses to apply for rebates on local sales taxes for projects meant to add jobs or expand a business.
Brenda Guenther, Benton County comptroller, said the county revised its 2020 projection when the pandemic began from $11.4 million to $10.02 million. She said the county is ahead of the scaled-back pace for the year and should exceed the $10.02 million figure.
Treasurer Bobby Hill said Washington County’s sales tax revenue during the pandemic has exceeded his expectation.
“For the year-to-date, we’re up $422,000,” Hill said. “That would be good in a normal year, much less in a year when we were locked down for a month. It’s been pretty much business as usual in 2020.”
Census to hit county sales tax revenue
Counties in Arkansas will see a drop in sales tax revenue in 2021 after the results of the 2020 Census are in. Counties with a countywide 1% sales tax share the proceeds with cities in the county on a per capita basis. As the population of cities grows, the county share of the tax decreases. Washington County Treasurer Bobby Hill said the county lost about $1 million in revenue after the 2010 Census and he expects a similar drop next year. Brenda Guenther, Benton County comptroller, said the county’s share of the 1% sales tax dropped from about $8.5 million in 2010 to about $6.2 million in 2011. Guenther said she is working on her projection for the impact of the 2020 Census on Benton County.
Source: Washington County,
Benton County