Re­gion sees rev­enue rise from sales tax

Col­lec­tions up from May 2016 in four ma­jor cities, two coun­ties

Northwest Arkansas Democrat-Gazette - - NORTHWEST ARKANSAS - STACY RYBURN

New busi­nesses, well-at­tended events, a ris­ing pop­u­la­tion and Ama­zon re­port­ing sales tax for the first time has con­trib­uted to a grow­ing rev­enue source in North­west Arkansas.

Sales tax col­lec­tion in the four ma­jor cities and two coun­ties rose across the board from May last year. That means more money to put to­ward salaries, projects or re­serve.

City lead­ers will at­tribute the pros­per­ity to a va­ri­ety of rea­sons, but one com­mon thread linked every­one, said Don Zim­mer­man, ex­ec­u­tive direc­tor of the Arkansas Mu­nic­i­pal League. On­line re­tailer Ama­zon started col­lect­ing sales tax on items not from a third-party seller, equat­ing to about half its trans­ac­tions, he said.

“Ama­zon vol­un­tar­ily agreed to start col­lect­ing it on their sales as of March 1,” Zim­mer­man said. “Then the cities started re­ceiv­ing those in­creases in May, as did the coun­ties.”

Cities in North­west Arkansas col­lect a 2 per­cent sales tax with half go­ing to­ward re­pay­ing bonds. The other 1 per­cent goes into each city’s gen­eral fund. County col­lec­tion gets divvied up based on Cen­sus es­ti­mates.

July fig­ures rep­re­sent May sales.

UP NORTH

Ben­tonville’s 26 per­cent in­crease in sales tax col­lec­tion from May last year to May this year doesn’t nec­es­sar­ily rep­re­sent ac­tual growth

that large. Busi­nesses such as Wal-Mart get their sales tax re­bates in batches, re­sult­ing in fig­ures that jump up and down.

How­ever, it’s clear Ben­tonville is on the up, Mayor Bob McCaslin said. The years of 2012, 2013 and 2014 each had one $1 mil­lion month of sales tax col­lec­tion. Three months hit $1 mil­lion in 2015, as was the case in the fol­low­ing year, with $900,000 months on the rise. It seemed like Ben­tonville crossed into a new nor­mal, McCaslin said.

This year has al­ready had three $1 mil­lion months. The low­est was April at $841,751. The growth in sales tax col­lec­tion is on track to far ex­ceed what the city an­tic­i­pated for the year, said Denise Land, Ben­tonville fi­nance direc­tor.

“We are ahead of last year by about 10 per­cent,” she said. “We bud­geted $10.1 mil­lion. We’re half­way through the year, and we’re at $6.1 mil­lion. So, we’re do­ing bet­ter than we planned.”

The third an­nual Ben­tonville Film Fes­ti­val held in May no doubt con­trib­uted to a $363,103 jump from the prior month, Land said.

The “des­ti­na­tion” moniker for the city has be­come much more real, McCaslin said. The hos­pi­tal­ity in­dus­try in Ben­tonville has shown the great­est in­crease over re­cent years, he said.

“More and more peo­ple are hear­ing about us,” McCaslin said. “Sup­port­ing that, their vis­its, to a great de­gree, are in this num­ber be­cause they’re part of the over­all tax col­lec­tion. When­ever they’re here, they’re spend­ing money.”

Sales tax col­lec­tion in Rogers has re­mained steady for years, said Casey Wil­helm, city fi­nance direc­tor. May fig­ures rose about 2 per­cent from 2016. Rogers had the sec­ond-high­est gross amount of sales tax rev­enue in May with $1.5 mil­lion.

Be­ing in the mid­dle of ev­ery­thing ge­o­graph­i­cally and hav­ing strong re­tail hubs such as Pin­na­cle Hills Prom­e­nade and Ca­bela’s helps keeps the num­bers con­sis­tent, Wil­helm said.

“We do ben­e­fit from any time there’s a big event at the U of A, or if some­thing in Ben­tonville’s go­ing on,” she said. “Any­time we have those events I think we still feel those ben­e­fits in our area be­cause of the amount of shop­ping and din­ing.”

Mayor Greg Hines said be­ing able to rely on steady sales tax growth, more build­ing per­mits and busi­ness li­censes and in­creases in prop­erty tax rev­enue means more money can go into re­serves. The city has made some big moves us­ing re­serves over the years, in­clud­ing buy­ing a $1 mil­lion piece of prop­erty for a park, build­ing a new fire sta­tion and turn­ing the Hai­ley Ford build­ing, which once housed the Rogers Morn­ing News, into an ex­pan­sion of the Rogers His­tor­i­cal Mu­seum.

“It’s pru­dent for us to have some re­sources set aside for the things we don’t know might hap­pen,” Hines said. “I think that’s the dif­fer­ence be­tween the way we func­tion and the way that some other cities in Amer­ica func­tion that are lit­er­ally sit­ting on the hills of po­ten­tial bank­ruptcy.”

An econ­omy on the rise con­trib­uted to a 12 per­cent in­crease in col­lec­tions for Ben­ton County, but May saw a sig­nif­i­cant jump from the month be­fore, said Brenda Guen­ther, comptroller.

The ac­tual col­lec­tion the county re­ceived, which is about 19 per­cent of the to­tal, was $810,939. April col­lec­tion was $672,980. A big dif­fer­ence maker likely was Ama­zon, Guen­ther said.

“We’re start­ing to see those num­bers come in where oth­er­wise they weren’t in the past,” she said. “Any kind of col­lec­tion that wasn’t avail­able in the past, that’s ab­so­lutely cor­rect.”

DOWN SOUTH

Wash­ing­ton County’s sales

tax col­lec­tion went from $582,114 in April to $645,929 in May. Ama­zon likely amounted to a good chunk of that nearly $52,000 dif­fer­ence, but tax­ing all on­line sales would turn in mil­lions in rev­enue, said Jus­tice of the Peace Eva Madi­son. Two bills ad­dress­ing that is­sue died when the state Leg­is­la­ture ad­journed May 1.

“The In­ter­net sales tax is­sue is re­ally big for coun­ties be­cause we’re see­ing a loss in rev­enue, es­pe­cially in Wash­ing­ton County,” she said. “With the state do­ing things like hav­ing a sur­plus and cut­ting taxes, it passes more bur­dens onto the county. We’re foot­ing the bill for a lot of state things.” Madi­son used as an ex­am­ple hold­ing state in­mates at the county jail and not be­ing fully re­im­bursed for the costs.

Spring­dale re­ported a record achieve­ment in sales tax col­lec­tion with $1.4 mil­lion in May. Mayor Doug Sprouse at­trib­uted the growth not only to Ama­zon but to an over­all boom in busi­ness such as Sam’s Club and 10 Box CostPlus set­ting up shop in the city with res­i­dent sup­port.

Sam’s Club opened in May off In­ter­state 49 near Ar­vest Ball­park. The ware­house club op­er­ated in Spring­dale un­til mov­ing to Fayet­teville in 2007. City lead­ers have re­peat­edly pointed to the store clos­ing as a loss of about $1 mil­lion in sales tax rev­enue an­nu­ally.

Harps Foods opened the 10 Box gro­cery store in Fe­bru­ary.

“Our down­town is also grow­ing, and new busi­nesses are open­ing with much suc­cess. We all must work to­gether to sup­port our com­mu­nity,” he said. “As our res­i­dents con­tinue to choose to shop lo­cal, and busi­nesses con­tinue to choose to in­vest in our com­mu­nity, which draws in shop­pers from around NWA, we ex­pect rev­enue to con­tinue to in­crease.”

Spring­dale has boasted at least $1 mil­lion in sales tax rev­enue for 15 straight months and 26 of the past 27 months. If the trend con­tin­ues, Spring­dale could soon meet Rogers in sheer monthly amount col­lected, said Wy­man Mor­gan, Spring­dale’s fi­nance direc­tor.

Fayet­teville led the cities with the most sales tax col­lected in May with $1.8 mil­lion. The fig­ured rep­re­sented an $85,247 in­crease from May the pre­vi­ous year, or about 5 per­cent.

Chief Fi­nan­cial Of­fi­cer Paul Becker bud­geted for about 2 per­cent sales tax growth, which means the city should be able to pay for raises with cur­rent rev­enue with­out hav­ing to dip into re­serves, he said.

Becker at­trib­uted the growth to a com­bi­na­tion of a ris­ing pop­u­la­tion with more peo­ple spend­ing money in the city and an uptick in new busi­nesses. How­ever, it’s hard to say how much Ama­zon con­trib­uted be­cause the state hasn’t re­leased those num­bers.

“From my per­spec­tive, all I know is I’m happy be­cause we’re get­ting more money than I ex­pected,” Becker said.

State law doesn’t al­low mu­nic­i­pal­i­ties to col­lect a tax the state doesn’t col­lect, so there’s no law re­quir­ing Ama­zon to do what it de­cided to do in March, Chief of Staff Don Marr said.

It’s a ben­e­fit not only to larger cities such as Fayet­teville but across the re­gion and state, he said.

“Even re­ally small towns that nor­mally don’t get any­thing have seen some small pay­ments,” Marr said.

NWA Demo­crat-Gazette/BEN GOFF • @NWABENGOFF

Jonathan Cousins, Wal-Mart em­ployee, rings up a cus­tomer Thurs­day at the su­per­center on Pleas­ant Cross­ing Boule­vard in Rogers. Cousins and other as­so­ciates were of­fered capes they could wear as part of the re­tailer’s ‘every­day hero’ back to school theme.

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