Sales tax revenue up

FARMINGTON — City officials in Farmington and Prairie Grove expected to see a possible dip in sales tax revenue in May because of the coronavirus pandemic, but it turned out to be the opposite.

Revenue from local and county sales taxes are up for both cities, compared to 2019.

“We were extremely pleased and happy with the March revenues,” Larry Oelrich, director of administrative services and public works, said at Prairie Grove’s City Council meeting in late May.

Sales tax revenue distributed by the state represent sales from two months earlier, so May receipts are from taxes collected in March.

“I definitely expected them to go down,” Oelrich said last week, noting the governor closed restaurants around March 10. In Prairie Grove, one-half to two-thirds of restaurants closed. Others offered curbside, delivery or drive-through service only.

Oelrich said he also expected a decrease from county sales tax revenue, mainly because the University of Arkansas sent students home for online classes.

Looking at 1% of its sales tax rate, Prairie Grove received $53,584 in May from sales tax revenue, compared to $46,385 in May 2019, a 16% increase.

The city’s local sales tax rate is 2.75%, with 1% going to bonds for the sewer plant, 0.75% for capital improvement funds, 0.5% dedicated to fire and police salaries, 0.25% for library/parks and 0.25% for capital improvements and expenditures.

Prairie Grove’s revenue from its 1% sales tax is up 13.5% for the months JanuaryMay, compared to last year. For 2019, the city received $226,208 from a 1% sales tax for January-May. For this year, the city has received $256,761.

Prairie Grove’s revenue from the county sales tax also are up for May, compared to 2019. For May receipts, Prairie Grove received $82,187 from the county sales tax, compared to $78,624 in May 2019.

Revenue from the county sales tax is distributed to cities based on per capita.

Prairie Grove has received $405,147 year to date from the county sales tax, compared to $377,329 for last year.

Oelrich said his “guess” is sales tax revenue are up because of online sales. Locally, he said grocery stores have had an increase in business. In addition, residential construction hasn’t slowed.

Farmington Mayor Ernie Penn said he was “kinda surprised, but kinda wasn’t” when the city received its May receipts, based on March sales.

He pointed out Tractor Supply and Walmart’s Neighborhood Market have been “booming” with business during the past three months.

“I think people are shopping locally instead of going in to Fayetteville to shop,” Penn said.

Farmington has a local 2% sales tax rate. Of this 1% goes into the general fund. For the second 1%, part is dedicated to paying off recreation and street improvement bonds and the rest goes into the general fund.

The city provides a report on sales tax revenue for City Council meetings each month. This report includes all money collected from the local 2% sales tax going into the general fund.

For May, Farmington received $152,891 in sales taxes from its local tax, compared to $130,596 in May 2019, a 17% increase.

Farmington, like Prairie Grove, also is up for the year. For January-May, Farmington received $697,559 in sales tax revenue, compared to $592,908 for last year.

County sales tax revenue increased from $92,093 in May 2019 to $103,587 this year.

For the year January-May, Farmington is up by $115,092 in county and local sales tax revenue, compared to the same period in 2019.

Penn said June may be a better indicator of how the pandemic is affecting sales tax revenues.

“But we’re up $115,000 from what we received last year, so that’s good,” Penn said. “The main thing is that I don’t want to compromise police, fire and public works. We need for them to be working.”