County, city ask for timelier sales tax reports

Garland County and city of Hot Springs officials know the coronavirus pandemic has affected March and April sales tax collections. Knowing the extent of the effect would help them revise revenue forecasts and make budget adjustments.

But the 60-day lag between collection of local sales taxes and the state revenue agency remitting monthly payments leaves localities in the dark.

“If they could pick that up and get it to us in 30 days it would sure help us with a proactive approach on trying to deal with the shortfalls,” County Judge Darryl Mahoney said. “As of right now we just have to sit here twiddling our thumbs wondering exactly what it’s going to be. If they could speed that up it would certainly be helpful.”

The county and city wrote a letter to Sen. Bill Sample, R-District 14, last week explaining the problem. It’s an issue the senior member of the county’s legislative delegation said he’s been trying to remedy for a number of years.

“I’ve been working on that for quite some time to no avail,” he said. “(The Department of Finance and Administration) does things on their own time. They don’t get in a hurry as far as remitting the money back to the cities and counties. The cities and counties have done a very good job at handling COVID, but they’re in dire straits as far as money because most of their money comes from sales taxes.”

Sample requested cities and counties write letters asking for timelier and more detailed sales tax reports. He presented them to the governor’s office last week with the hope of spurring

DFA into action.

“DFA does a fairly good job at what they do, but they’re operated by bureaucrats,” Sample said. “Those bureaucrats don’t answer to anyone except the governor.”

Hot Springs levies a 1.5% sales tax for its general, police and fire funds. Garland County levies a 1.5% sales tax for its general, solid waste and jail funds. The county levy includes a 0.675% sales tax securing the $54.6 million in road bonds voters approved in a 2016 special election.

The taxes raised more than $50 million for the two governments last year, according to information provided by their financial departments. The Garland County Quorum Court and Hot Springs Board of Directors adopted a joint resolution last year requesting a statutory mandate for timelier reporting and more detailed reports.

“In today’s world of technology and resources, the details of tax collection information should be made available and accessible to all government leaders,” Hot Springs City Manager Bill Burrough said in his letter to Sample. “States must allow their local governments the tools they need to respond effectively as economic conditions change.

“As the coronavirus has taught us, swift adjustments are a necessity and will be important in the months ahead as revenues to cities will continue to decline and the need for services will rise.”

Information on rebates DFA deducts from monthly payments is also lacking. The agency deducted more than $800,000 from the county’s sales tax payments last year and more than $600,000 from the city’s. Only the first $2,500 of a single transaction for a qualified business expense is subject to local sales taxes. Taxes are collected on the full amount, but taxpayers can file for rebates on taxes paid on amounts over the cap.

DFA has said the Tax Procedure Act prohibits it from disclosing who’s filed for and received rebates.

Increased collections the city and county received last year and the first two months of this year coincided with the mandate requiring online retailers and e-commerce facilitators such as Amazon and eBay to collect state and local sales taxes. The requirement, enabled by the passage of Act 822 last year, took effect July 1.

Sample said the shortfalls would be more pronounced if online retailers weren’t required to collect local sales taxes.

“I don’t know what we would’ve done if we hadn’t passed a bill like that,” he said.