City, county see gains in July sales tax revenue
The city of Hot Springs and Garland County’s sales tax collections have seen significant gains since the law requiring out-of-state online retailers and e-commerce facilitators to collect and remit local sales taxes took effect in July 2019.
Excluding April, when the coronavirus pandemic had its most profound effect on the economy, monthly collections from the last half of 2019 and first half of 2020 increased on a yearover-year basis, but they were being compared to months when the internet sales tax wasn’t in place. July sales tax reports the city and county released this week provided the first year-overyear comparison that accounted for the expanded tax base, suggesting the previous gains were not entirely a function of the new tax law.
The $1,358,684 the city’s 1% general fund sales tax collected in July was 9.55%, or $118,417, more than last year. The $986,642 the county’s 0.50% general and solid waste funds sales tax generated was 13.11%, or $114,394, more than the previous July.
Remote internet retailers and e-commerce facilitators, such as Amazon and eBay, with $100,000 or more in aggregate annual sales in Arkansas, or 200 or more annual transactions, have been required to collect and remit sales taxes since last July. There’s about a 60-day lag from when businesses collect sales taxes at the point of sale and when the state revenue agency
sends the proceeds to local governments.
“This month we’ll see our first apples-to-apples comparison on our sales tax,” County Judge Darryl Mahoney told the Garland County Quorum Court earlier this month. “Our internet sales tax didn’t start until July 2019. When we get our July numbers in, everything that we had last year we’ll have this year, so we’ll get a true grasp on where we’re at.”
The $8,426,967 the city’s 1% sales tax collected through the first seven months surpassed the previous year by 4.09%, or $331,208, and is 2.92%, or $239,391, ahead of the 2020 budget’s $14 million revenue forecast. Revenue has outpaced the forecast despite a 15.91% drop in April collections.
“From what I have been seeing in downtown activity, beating last year’s monthly numbers in August and September will be achievable and probably by similar margins, if not greater,” Mayor Pat McCabe said in an email to the Hot Springs Board of Directors.
The $6,039,404 the county’s 0.50% sales tax collected through July was 6.4%, or $363,731, more than last year despite a 9.35% drop in April. Collections exceeded the county’s revenue forecast by 23.46%, or $1,147,688. The revenue projection is about 85% of the $10 million the tax raised last year.
The 1.74% gain the Hot Springs Advertising and Promotion Commission reported in July collections of its 3% sales tax on prepared food and lodging inside the city snapped a five-month streak of year-overyear declines, which included
45.50% and 54.34% drops in April and May.
Lodging collections from the roughly 70 hotels, motels, RV Parks and campgrounds within the commission’s taxing authority were up 12.44%, or
$23,661, compared to last year. Collections from the roughly
300 restaurants, food trucks and grocery and convenience stores subject to the prepared-food tax were down 2.31%, or $11,627. The prepared food tax has lost ground every month through July and is 15.19%, or $488,944, behind the first seven months of last year.
The $3,445,717 the lodging and prepared food tax collected through the first seven months is 19.23% lower than last year.
The Hot Springs Metropolitan Statistical Area had 1,400 fewer jobs in July compared to the previous July, according to the U.S. Bureau of Labor Statistics revised report. The unemployment rate dropped from 10.9% in June to 9.6% in July. The rate was 4.3% in July 2019.
April was the worst month for the job market and unemployment, with 5,800 fewer jobs compared to the previous April and a 15.6% unemployment rate. The rate was 3.0% in April 2019.