Rebate reduces May collections
A large rebate contributed to the 0.39 percent year-over-year decrease in May collections of the city’s 1 percent general fund sales tax, the city said.
The roughly $76,000 the city said was deducted from May collections dropped the monthly total to $1,150,161, or $4,517 less than last year. It’s the second large rebate the city has reported this year, joining the $98,703 deducted from February collections.
Only the first $2,500 of an invoice is subject to local sales taxes. Businesses can claim rebates for sales taxes paid on amounts over the cap, but the state tax code prohibits the state revenue agency from disclosing the business or businesses filing for the refund. The prohibition led the Hot Springs Board of Directors and Garland County Quorum Court to adopt a joint resolution earlier this summer calling on
area legislators to address the lack of transparency.
Both local governments have said the lack of information complicates their ability to forecast revenue and budget accordingly.
April collections rose a record 22.93 percent after downturns of 4.84 and 6.83 percent in February and March.
The city said Monday that large construction projects, such as the $100 million expansion underway at Oaklawn Racing Casino Resort, are expected to cause more volatility in sales tax remittances.
It cautioned that some of the proceeds from the record-setting April, when the
1-percent sales tax raised
$1,300,352, could eventually be clawed back through rebate claims deducted from future monthly remittances.
“With the volume of construction that we have going on, I expect to see a lot of roller coaster months in the next year or so,” Finance Director Dorethea Yates said Monday.
The $5,595,241 the sales tax collected through the first five months of the year is 1.81 percent, or $99,611, more than last year and 1.68 percent, or $92,295, ahead of budget projections. The city’s 2019 revenue forecast projected
$13,318,300 in annual collections.
April and May collections of the Hot Springs Advertising and Promotion Commission’s
3 percent hospitality tax rose
11.13 percent and 14.90 percent, putting collections 7.32 percent ahead of last year’s pace. The 3 percent levy on prepared food and lodging inside the city raised $2,917,273 through May. Collections from the more than
70 hotels, campgrounds and RV parks within the commission’s taxing authority rose
37.24 percent compared to the previous May.
Unlike the city and county, the ad commission collects its tax from businesses directly. The state Department of Finance and Administration remits local sales tax collections to cities and counties.
Collections of the 0.50 percent countywide sales tax Garland County levies in support of its general and solid waste funds were up more than 20 percent in April. The county has yet to release its report for May collections.