Northwest Arkansas Democrat-Gazette
Farmington, Prairie Grove sales tax revenue climbs
FARMINGTON — Going into the last month of a year dominated by the covid-19 pandemic, Farmington and Prairie Grove are reporting local sales tax revenue has increased every month this year, compared to the same month in 2019.
Both cities have seen an increase of more than 18% in local sales tax revenue for 2020, compared to 2019.
Lincoln has seen an increase of 5.3% in sales tax revenue in 2020, compared to the same period in 2019.
‘UNPRECEDENTED’ GROWTH
Larry Oelrich, director of administrative services and public works for Prairie Grove, described it this way in his monthly city newsletter: “The growth in sales tax this year is unprecedented since the city first began collecting sales tax over 30 years ago.”
Year to date, Prairie Grove’s collection is up 19.3% over the same period in 2019. Prairie Grove received $526,114 for its 1% tax in 2019 for January-November. This compares to $ 626,422 for January-November in 2020, an increase of more than $100,000.
Oelrich estimates for each 1% in collection, Prairie Grove will receive around $685,000 this year. For the 2020 budget, Oelrich estimated a 1% local tax would bring in $600,000 for the year.
Prairie Grove’s local sales tax rate is 2.75%. Of this rate, 0.75% pays on the 2012 bond issue; 1% on the 2014 bond issue; 0.25% is dedicated to parks and library; 0.25% is for equipment and capital improvements; 0.5% is dedicated to police and fire salaries.
Prairie Grove received $ 60,607, per 1% collected, for its November distribution from sales in the city in September. This compares to $51,950 received in November 2019.
Sales taxes collected by businesses are sent to the state Department of Finance and Administration, which calculates the amount owed to taxing entities and distributes the money about two months later.
The city’s biggest jump percentage-wise, occurred in August. Prairie Grove received $66,506, per 1% collected, in August, compared to $48,636 for August 2019, an increase of almost 38%.
Oelrich said, “Thirty-seven percent, that’s astronomical. That’s unheard of.”
He attributes the increase to tax collected from internet sales, a fairly new state law, and that more people are staying in town to shop because of covid-19, instead of driving to Fayetteville.
“People are ordering in, instead of going out and looking at it,” Oelrich said.
In addition, ongoing construction in Prairie Grove is impacting sales tax revenue, he said, noting, “Every load of concrete, lumber or steel, that’s a sales tax for us.”
Looking back over the past five years, historically Prairie Grove sees a bump in revenue for August and September distributions and is down some for January and February distributions. Prairie Grove was up significantly for August and September this year. Oelrich said he will be interested to see how revenues look in January and February in 2021.
‘BLESSED’ TO HAVE WALMART
Year to date compared to the same period in 2019, Farmington’s sales tax revenue is up by almost $262,000, an 18.4% increase, according to information provided by Melissa McCarville, city business manager.
Farmington has a 2% sales tax rate. Of this 1% goes into the general fund. For the second 1%, part is dedicated to paying off park and street improvement funds and the rest goes into the general fund.
For January- November 2020, the city received $ 1,684,758 in local sales tax revenue, compared to $1,422,797 from January-November 2019. (This includes all local sales tax revenues that go into the general fund).
Similar to Prairie Grove, Farmington’s biggest jump percentage- wise also occurred in August. For August 2019, the city received $131,760 in local sales tax revenue, compared to $174,923 received in August this year, a 33% increase.
For November, Farmington received $167,888 in sales tax revenue, compared to $142,520 in November 2019, a difference of $25,368 and an 18% increase.
When it comes to local tax collection, Farmington is “blessed” to have a Walmart in town, McCarville said.
Like Oelrich, she also attributes increased sales tax revenue to internet sales.
In addition, Farmington has multiple residential subdivisions under construction.
Both cities have seen an increase of more than 18% in local sales tax revenue for 2020, compared to 2019.
LINCOLN’S TAX FIGURES
Through November, Lincoln has received $283,329 from its 1% sales tax, compared to $269,135 from January-November 2019. Monthly comparisons were not available last week.
The average for tax distributions for Lincoln this year has been $25,000 to $26,000 per month.
Lincoln presently has a 2% sales tax rate. Of this, 1% goes to capital improvements, 0.375% to parks and the library and 0.625% to the library construction bond.
In an article in September, Lincoln Mayor Doug Hutchens said he believes sales tax revenue is up in Lincoln because more people are shopping locally. Like Oelrich and McCarville, Hutchens said he believes online sales also are contributing to increased sales tax revenue.