Sales tax receipts mixed for local governments; businesses still struggling with pandemic

Cities and counties in Northwest Arkansas had mixed reports for sales tax revenue received in April, while some small businesses are still struggling with the effects of the covid-19 pandemic.

Sales tax revenue received by the four largest cities and Benton and Washington counties represents sales by merchants in February. Comparisons are to April 2020.

Bentonville showed an increase of more than 22%, about $1.4 million compared to $1.1 million.

Fayetteville was up about 1.5 %, with revenue of $1.8 million compared to about $1.78 million.

Rogers showed a 3.8% decline, with revenue of just under $1.5 million compared to about $1.6 million.

Springdale's decreased by about 7.6% to just under $1.2 million compared to $1.3 million.

Benton County had an increase of 15% with revenue of $867,000 compared to $781,000. Washington County revenue was down less than 1%, with revenue of $647,000 compared to $648,000.

Officials of all four cities and both counties said they have been pleased and surprised that revenue from their local sales taxes has generally grown through the covid-19 pandemic. Federal and state officials declared health emergencies in March 2020 and imposed restrictions on many types of businesses and public gatherings that are now being relaxed.

Washington County Treasurer Bobby Hill said two events may have depressed economic activity reflected by the sales tax revenue in February. The winter storm probably reduced sales as people were more likely to stay home, he said. Also, February was a leap year in 2020 with 29 days, instead of the 28 days in February 2021.

Hill said a drop in county sales tax revenue is rare.

"We were down just a smidge," he said. "The last time we were down was in June of 2020 when we were down by 0.15%. That was when covid was just getting started, and even that was less than 1%."

Brenda Peacock, comptroller, said Benton County's revenue is still growing faster than expected. Peacock said the county is ahead of 2020 revenue by nearly 15%.

While most government revenue has grown, some local businesses say the recovery will be long.

Cindy Arsaga, co-founder and owner of the Arsaga's coffee houses and restaurants in Fayetteville, said the businesses are still trying to recover from the pandemic. Business plummeted with restaurants initially closed in March 2020, then allowed to open with limits on the number of patrons and social distancing requirements, she said.

"Before the pandemic, we had more than 100 employees," Arsaga said. "We got down to 20. Some of our locations were closed, and some haven't reopened yet. The locations in the University of Arkansas law library and the Fayetteville public library closed. The Depot, which was the driver for our business, had to shut down."

Arsaga said the business survived with traffic at its drive-through location on Martin Luther King Jr. Boulevard and pickup service at the Center and Church streets restaurant and at a restaurant in the Mill District that opened in December.

"We were extremely lucky to have opened a drive-through location less than a year before the pandemic hit," Arsaga said.

The Depot reopened last week as a coffeehouse only.

Paul Becker, finance director for Fayetteville, said the relatively small growth reported wasn't surprising. Becker said the city's revenue has been growing at a higher rate in recent months.

"I just think we're going to have ups and downs," he said. "We've been hitting very high numbers for a long period. But that's not sustainable."

Jake Harper, with Bentonville, said his city's larger uptick just continues a long-standing trend that sees Bentonville's revenue fluctuate because of large businesses asking for rebates on sales taxes under a state program. A large rebate can change the city's revenue in a given month, which then skews a comparison of the revenue for the same month the next year. Harper said he focuses on the overall revenue picture and Bentonville's revenue for 2021 has been positive.

"Last year, the first month was down, the second month was up a little and the third month was down a little. We're used to the swings," he said.

Casey Wilhelm, with Rogers, said she couldn't guess why the city's sales tax revenue dropped, but the city budgeted for no increase in sales tax so one monthly decrease isn't concerning.