Sales tax growth is sign of improved economy
When working with local option sales taxes, it would be fairly easy to assume that a penny is a penny.
A 1% sales tax for Floyd County is divided on a percentage basis among the city of Cave Spring, the city of Rome and Floyd County governments. A change in revenue collection ought to register the same percentage change for each entity, since you’re talking about the same penny at the cash register.
But it doesn’t work that way.
Glancing back at the last two years of data as reported by the Georgia Department of Revenue, the positive side of the story is that collections are up locally. Significantly up.
The perplexing news is that the percentages vary from 8.2% to 9.9%.
For example, Floyd County government’s share of the basic local option sales tax for 2018 amounted to $8,131,124. In 2019, that increased to $8,801,400, an increase of 8.24%.
The city of Rome received $6,495,894 in 2019. That was up 9.9% from the $5,906,544 distributed in 2018.
Same penny, same distribution formula, different results.
When you add the city and county collections together, the figures come to $14,037,668 in 2018. The sales tax revenue climbed to $15,297,294, an increase of 8.9%.
Retired Georgia Highlands College economics professor Bruce Jones said he was surprised by the big jump because data on income growth indicates that personal income is only up between 1% and 2%.
“Given that we don’t have many more people and (just) 1% of additional income, that’s a real positive,” Jones said. “The fact that it’s up says we’re either doing a better job of collecting it or people are spending more than they were before — which would not surprise me.”
Enhanced collection of internet-based sales taxes — enacted in 2018 — could account for at least part of the increase. Jones said Amazon has been remitting local taxes for some time but he believes that some of the smaller sites may not have been.
“Tightening up the law on that was basically to make sure that everybody is on the same footing and that it is being collected the way it should have been collected,” Jones said.
Last week, Gov. Brian Kemp signed House Bill 276, which requires facilitators like Amazon and Google to also collect and remit the tax for third-party companies they allow to conduct business on their websites.
State Sen. Chuck Hufstetler, R-Rome, said there are estimates that the new law could generate another $10 million a month in revenue but he thinks that may be conservative. Those collections will begin April 1.
“We are typically left to guess what creates either increases or decreases in sales tax revenue,” Rome City Manager Sammy Rich said. “I think we have made some progress with the Department of Revenue and transparency, but we still are not to the point of having clear cut, readily available data that helps local governments better understand what’s going on with the local economy.”
Jones, who served on the Rome Board of Education for a number of years, said he’s seen reports where the basic local option sales tax receipts went up but the special purpose local option sales tax — which is collected at the same time — went down.
“That’s not possible,” Jones said.
The Georgia Department of Revenue did not respond to calls from the Rome NewsTribune.
Rome Floyd Chamber President Jeanne Krueger believes the increase in sales tax collections may, at least in part, be the result of a very intentional collaborative effort to get people in Rome to understand the importance of shopping at home.
“I think what we’re seeing is, when attention is drawn to something and the impact it can have, people really start making different choices about where they put their dollars,” Krueger said. “We’re very heartened by this.”
Robert H. Ledbetter Jr. of Robert H. Ledbetter Properties said the increase in sales tax collection could be as simple as the fact that the economy has improved.
“We’re at full employment, people have a little walking around money,” Ledbetter said. “I’d be interested in the breakdown. What’s groceries, what’s cars? You’ve got have something in the numbers to make them go up.”
As it relates to the difference between the distributions to Rome, Cave Spring and Floyd County, Ledbetter shrugged and said, “In a perfect world we would know how much is going to the state and how much we’re being remitted back. We truly don’t know that.”
For decades Rome had been recognized as the shopping hub of Northwest Georgia, but that position may have diminished over the years as growth across the Coosa Valley started to cluster around the communities on Interstate 75. Krueger sees a resurgence in Rome over the last couple of years, the result of a number of factors.
“People love to come and eat in our restaurants and shop in all of our specialty boutiques,” Krueger said.
Another factor, she said, is the consistently expanding medical community. People come from other areas for doctor visits, then eat and shop in town.
“When we have the tennis tournaments, that helps tremendously. I counted one day tags from 35 different areas outside of Floyd County,” she said. “When that starts happening, or you have events at Berry College like the Governors Honors program, I think it’s a great collaboration and I think it’s only going to get better.”
Krueger said draws from the Rome Braves to the tennis center to expanding use of the rivers and the growing trail network are all contributing to the growth of retail spending locally.
Ledbetter — whose company is in the process of building East Bend shopping center at Turner McCall Boulevard and Hicks Drive — said he hopes the large new development will add to Rome’s importance as a regional retail center.
“Hopefully we’ll capture some sales at East Bend that are outside the community now. We want to keep them here.” Ledbetter said. “We still feel that Rome is under-retailed in certain segments. The key is to keep people from spending money elsewhere. The trick is to bring the right people into town and you can’t always get those people.”
City Manager Rich said that city leaders have been very pleased with the current increase in sales tax collections. “However, we would never assume the collections will remain consistently higher,” Rich said.