Holiday Sales Taxes Help Cities, Counties

Even Big Christmas Won’t Erase shortfall

By Scott F Davis

Posted: November 28, 2009 at 4:12 a.m.

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City and county officials are hoping strong retails sales during the holiday shopping season boost lagging sales taxes.

But it won’t make up for losses so far this year even if retail sales are up over last year, officials said. Payment lags two months behind, so the December collection is received by cities and counties in February.

Over the past several years, Bentonville has received between 8 and 10 percent of its annual sales tax revenue from its December sales, said Denise Land, the city’s director of finance and administration. Land said she hopes the city “will finish strong on the last two months of 2009.”

Rogers typically gets the most sales tax in February, but that did not happen this year because the city’s payment in February faced deductions from good sized rebates, said Jerry Hudlow, the city’s chief financial officer. A business has up to six months to request a tax rebate from county and city taxes on large purchases, he explained.

“This year has been up and down so much ... December should be the biggest month of sales,” he said.

The last time Benton County saw an increase compared to the previous year was in January when it received payment for last November’s sales, said Benton County Comptroller Richard McComas. February’s payment for December 2007 sales were down only slightly this year, he said.

“The holiday sales make an impact, but they are not big enough to make up for losses through the rest of the year,” said McComas. “That was our largest month of the year, but it’s not by any means a huge number.”

Benton County sales tax collection is down 9 percent in November and down 7 percent for the year through November, he said.

“Hopefully that will stop and pick back up next year,” McComas said.

In Washington County, the February check for December collection has been the year’s biggest for at least five years, according to figures provided by Treasurer Roger Haney. December receipts have averaged around 9.5 percent of annual collections since 2005, figures show.

“The latter months of the year are generally our better months for sales tax collections with December being our best month,” Haney said.

The last time Washington County saw an increase compared to the year before was in October 2008 for the August 2008 receipts, monthly figures provided by Haney show.

Fayetteville gets nearly 10 percent of its annual sales tax revenue from December’s collection, said Paul Becker, the city’s finance director.

December generally brings in 19 percent more than an average month in Fayetteville, Becker said.

Springdale Mayor Doug Sprouse said he’s hopeful local residents get out and support businesses during the holiday season. He said he also realizes that people need to make wise decisions based on personal finances.

“My hope is that Springdale folks will sure try to support our Springdale businesses because the sales tax is (important for the city),” Sprouse said. “While I think it’s bottoming out, we could sure use a shot in the arm.”

Springdale’s sales tax collection is down about 7.5 percent for the year, but that’s about what the city budgeted for, he said.

“We’re down,” Sprouse said. “At least it’s not any worse than we projected.”

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