Sales Tax Revenues Up

MAY TAX RECEIPTS BASED ON MARCH SALES

FARMINGTON — City officials in Farmington and Prairie Grove expected to see a possible dip in sales tax revenues in May because of the coronavirus pandemic, but it turned out to be the opposite. Revenues from local and county sales taxes are up for both cities, compared to the same month in 2019.

‘Extremely Pleased’

“We were extremely pleased and happy with the March revenues,” Larry Oelrich, director of administrative services and public works, said at the Prairie Grove City

Council meeting in late May.

Oelrich said he had expected a decrease because of measures put in place by Gov. Asa Hutchinson to help slow down the spread of the covid-19 virus.

Hutchinson encouraged people to stay at home in early March

and only go out if necessary. Many businesses closed or sent their employees home to work. Schools began virtual instruction. Restaurants were closed for in-dining service.

Sales tax revenues distributed by the state represent sales from two months earlier, so May receipts are from taxes collected from sales in March.

“I definitely expected them to go down,” Oelrich said last week, noting that the governor closed the inside of restaurants around March 10. In Prairie Grove, one-half to two-thirds of the restaurants closed. Others offered curbside, delivery or drive-through service only.

Oelrich said he also expected a decrease from county sales tax revenues, mainly because the University of Arkansas sent students home for virtual classes.

Looking at 1% of its sales tax rate, Prairie Grove received $53,584 in May from sales tax revenues, compared to $46,385 in May 2019, a 16% increase.

The city’s local sales tax rate is 2.75%, with 1% going to bonds for the sewer plant, 0.75% for capital improvement funds, 0.5% dedicated to fire and police salaries, 0.25% for library/parks and 0.25% for capital improvements and expenditures.

Prairie Grove’s revenue from its 1% sales tax is up 13.5% for the months January-May, compared to the same period last year. For 2019, the city received $226,208 from a 1% sales tax for January-May. For the same period this year, the city has received $256,761.

Prairie Grove’s revenues from the county sales tax also are up for May, compared to the same period in 2019. For May receipts, Prairie Grove received $82,187 from the county sales tax, compared to $78,624 in May 2019.

Revenue from the county sales tax is distributed to cities based on per capita.

Prairie Grove has received $ 405, 147 year to date from the county sales tax, compared to $377,329 for the same period last year.

Oelrich said his “guess” is that sales tax revenues are up because of online sales. Locally, he said grocery stores have had an increase in business. In addition, residential construction has not slowed down in Prairie Grove.

“It’s crazy how many houses are going up,” Oelrich said.

‘Kinda Surprised’

Farmington Mayor Ernie Penn said he was “kinda surprised but kinda wasn’t” when the city received its May receipts, based on March sales.

He pointed out that Tractor Supply and Walmart’s Neighborhood Market have been “booming” with business during the past three months.

“I think people are shopping locally instead of going in to Fayetteville to shop,” Penn said.

Farmington has a local 2% sales tax rate. Of this 1% goes into the general fund. For the second 1%, part is dedicated to paying off recreation and street improvement bonds and the rest goes into the general fund.

The city provides a report on sales tax revenue for Farmington City Council meetings each month. This report includes all money collected from the local 2% sales tax that goes into the general fund.

For May, Farmington received $152,891 in sales tax receipts from its local tax rate, compared to $130,596 in May 2019, a 17% increase.

Farmington, like Prairie Grove, also is up for the year. For January-May, Farmington received $697,559 in sales tax revenues, compared to $592,908 for the same period last year.

County sales tax revenues increased from $92,093 in May 2019 to $103,587 this year.

For the year January-May, Farmington is up by $115,092 in county and local sales tax revenues, compared to the same period in 2019.

Penn said June may be a better indicator of how the pandemic is affecting sales tax revenues.

“But we’re up $115,000 from what we received last year, so that’s good,” Penn said. “The main thing is that I don’t want to compromise police, fire and public works. We need for them to be working.”