LITTLE ROCK — July sales tax reports from Northwest Arkansas' largest cities continued a trend of declining revenue that has city leaders creating cautious revenue projections as they prepare 2010 budgets.
Bentonville, Fayetteville, Rogers and Springdale's 1 percent sales tax collections in July all dropped below July 2008 figures, according to data released Monday by the Arkansas treasurer's office.
Each of the four cities collects 2 percent in local sales taxes, with 1 percent going to the general city budget and the other 1 percent approved by voters for specific capital projects.
Springdale's decline was the least severe. July collections were $874,613, a 0.3 percent drop below 2008. Bentonville saw the largest drop, 24 percent, collecting $506,344.15. Rogers' collections were down 9.2 percent and Fayetteville's were down 5.2 percent.
"We've been leveling off," said Wyman Morgan, Springdale's director of finance and administration. "We've had some indication that maybe the recession is starting to ease up a bit, but I think we had just hit the bottom."
Springdale's revenue, which started slumping long before other cities, has seen more moderate declines recently. July was the third best month in2009, Morgan said.
As administrators work to create the city's 2010 budget, Morgan said he may recommend projecting flat or declining sales tax rev-enues into the coming year.
"We figure 2010 will still be pretty tight and won't count on relief until the next year," he said.
Don Marr, chief of staff for Fayetteville Mayor Lioneld Jordan, said the city's 2010 budget projections would be based on actual collections in 2009 with a slight adjustment to reflect inflation.
The city also plans to budget revenues for building permit fees off of actual 2009 collections, Marr said. In the past, Fayetteville collected about $1.2 million a year in permit fees. In 2009, collections fell to $419,000, contributing to a revenue shortfall.
Bentonville finance director Denise Land attributed the severity of the city's July collections drop to refunds provided through the state's Streamlined Sales Tax policy.
The streamlined tax policy, put into place Jan. 1, 2008, removed a cap that limited local taxes to the first $2,500 of an item's price, providing exemptions for vehicles and business purchases.
Businesses that previously avoided the taxes now pay them and seek refunds up to six months after, often collecting several months of refunds at once.
Bentonville leaders based their $7.6 million 2009 sales tax projection on 2007 collections to avoid inconsistent collections created through the Streamlined Sales Tax policy, a practice they'll continue for the 2010 budget, which the City Council will consider in November, Land said.
Bentonville collected $7.3 million in sales tax in 2007.
She expects to project a modest sales tax increase for the coming year.
"We're always going to be very cautious about our projections because the worst thing you can do is not make your revenue," Land said.
Rogers treasurer Jerry Hudlow said the city's year to-date sales tax collections are 4.15 percent below his projections. He estimated the city would collect $12.3 million in 2009, based on a 2.5 percent growth over actual 2008 projections.
He'll be more conservative when structuring the 2010 budget to avoid a revenue shortfall.
"The trend is here," Hudlow said.
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Northwest Arkansas, Pages 7, 12 on 09/22/2009