Counties, cities see sales tax revenue fall

Monday, July 14, 2008
AARON EISENHAUER ~ A number of businesses were seen near Route K at Interstate 55. Local governments, including Cape Girardeau, are suffering a drop in revenue from sales taxes.

Flat or falling sales tax revenue for local governments could force area cities and counties to put off hiring new employees or consider canceling scheduled pay raises, officials said Friday.

The drop off in revenue is hitting some governments much harder than others, but no city or county is meeting growth expectations. The problem is especially acute where the sales tax base is limited or relies heavily on sectors that are having a bad year, such as construction material retailers.

For example, the July payment to Scott County was 33 percent less than the payment for July 2007. And in Jackson, where Wal-Mart, Country Mart grocery and three building supply stores provide the bulk of the revenue, the July payment was off by 24 percent.

While figures from a single month can be skewed up or down by peculiarities of the calendar, year-to-date collections are also off substantially in Scott County and Jackson, where they have fallen 10 percent and 6.9 percent respectively.

Cape Girardeau and Perryville, Mo., are doing the best, with Cape Girardeau revenue up 0.1 percent for the year and Perryville accounts up 0.85 percent. Most area governments prepare budgets based on 2 to 3 percent growth rates.

The hit is especially hard because it comes at a time when inflation is driving up prices, especially for things like fuel and asphalt that loom large in most local budgets.

Jackson is looking closely at expenses in the police and public works budget to save money, city administrator Jim Roach said. And while the city hasn't imposed a hiring freeze, it is being careful about filling open jobs, he said.

"We have at least one position open now that I am looking hard at to see if we can do something to get those duties done without hiring someone," he said. "That is absolutely the kind of thing we are looking at."

Scott County was already dipping into fund balances to meet expenses this year. When the county commission wrote the budget in January, it projected the county would end the year with $204,000 in the bank. But revenue is $108,000 short of the money received in the first seven months of 2007.

Scott County is hurting because most of the big retail establishments in Sikeston are across the New Madrid County line, Associate Commissioner Dennis Ziegenhorn said. For example, there are no Wal-Marts in Scott County. And residents from the northern half of the county tend to do major shopping in Cape Girardeau, he said.

"I am going to have to do this the same way I do this at home when I don't sell houses," Ziegenhorn said. "Everybody has got things they can cut at home and the county is not any different, but it is not an easy thing."

Ziegenhorn said the county hasn't seen any rebound in sales tax revenue that could be attributed to the economic stimulus program that sent tax rebate checks worth $600 to $1200 to most families. "Everybody is sick of hearing it and they are sick of paying it but it all goes back to gas prices," Ziegenhorn said. "That is what happened to a lot of stimulus, paying up credit cards."

The full effect of the stimulus payments probably hasn't shown up in sales tax receipts because of the lag between the time when a retailer collects the money and the time it reaches a local government. Retailers have different reporting periods, depending on their size. The largest retailers, for example, send sales tax receipts to the Missouri Department of Revenue four times a month. The next class size reports monthly.

The revenue department sends payments out on or about the 10th day of each month that include the money collected during the previous month. Stimulus payments were sent out by electronic transfer beginning in March; payments sent by check started arriving late in May and the last checks were sent on Friday.

While Cape Girardeau recorded a 3.5 percent increase in sales tax receipts for the general revenue fund with the July payment, the city is up only 0.1 percent for the calendar year, finance director John Richbourg said. The city's financial year began July 1 and the budget assumes 2 percent growth in tax receipts.

For the fiscal year that ended June 30, Cape Girardeau's revenue fell $270,000 short of projections. The city saved $400,000, Richbourg said, by keeping jobs unfilled.

The new budget, even with 2 percent growth, eliminated "step" increases for city employees and, if revenue lags, cost of living adjustments due in January could also be on the cutting list, he said.

"We will have to review the revenue situation at that time," Richbourg said. "If it hasn't picked up, that would be one thing to cut back on."

Bollinger County hasn't resorted to cuts but every officeholder has been asked to watch spending closely, Clerk Diane Holzum said. "There are some things we can't help, but we are going to keep our budgets with no increase from last year," she said.

And in Perry County, where revenue is down 1.4 percent for the year so far, department heads and officeholders have been asked to scrutinize their budgets for items they can do without, Treasurer Veronica Hershey said.

Hershey said some of the drop could be attributable to online sales that allow buyers to avoid sales tax. "You can't encourage enough to the folks who live in your county to purchase locally," she said.

335-6611, extension 126

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