AT A GLANCE
Sales Tax Project
The Streamline Sales Tax Project is a multistate project that seeks to standardize tax policy throughout the United State in an effort to get Congress to pass legislation requiring mail order and Internet retailers to charge sales tax.
Rebates are part of the Streamline Sales Tax Project.
Before Jan. 1, 2008, county and city taxes throughout Arkansas were only charged on the first $2,500 of any single invoice. That cap no longer exists for individuals because of the project requirements.
However, the cap still applies to businesses' purchases through a rebate from the Department of Finance and Administration. The business owner must pay the sales tax, then file for a rebate within six months of the invoice date.
FAYETTEVILLE — Sales tax revenue continued a downward trend in area cities in July, with the exception of Rogers.
Finance directors are keeping a close watch on budgets as tax revenue for most cities is below expectations.
Sales tax revenue received in July refl ects May sales collected in June. Comparisons are based upon collection from the same month in the previous year. Each of the four cities collects a 2 percent sales tax.
One percent of the sales tax collected is devoted to repayment of bonds. The other 1 percent goes into each city’s general fund and is available for operations. For the purpose of this report, Northwest Arkansas Newspapers tracks the 1 percent going into the general fund.
Rogers eked out a small sales tax increase of 0.7 percent for July. Last July the city received $964,160 and garnered $970,706 this July, an increase of $6,545.
“It’s like treading water,” said Jerry Hudlow, Rogers city treasurer. “You are keeping your nose above water. You’re alive but that’s about it.”
Rogers’ revenue is down for the year about $11,000 compared with last year.
“Which means we are pretty steady, and in this economy I’ll take steady,” Hudlow said. The city is operating on a cash flow basis, meaning officials haven’t dipped into reserve funds to fill gaps.
Fayetteville’s sales tax revenue dropped $56,915 compared to July 2009. The city received $1,278,672 this month compared to $1,335,542 for the same month last year, a drop of 4.3 percent.
“It was disappointing news,” said Paul Becker, Fayetteville fi nance director. “I had expected better results, but it’s still within the range that we discussed at the end of the fi rst quarter.”
Mayor Lioneld Jordan developed a budget cutting plan that was implemented at the end of the fi rst quarter of the year.
“The mayor’s plan seems to be working. We are purposely holding open 14 positions. We are not taking applications for the positions and we have no plans to fill the positions this year,” Becker said.
The positions going unfilled include those in the district court and the planning, human resources, police and fi re departments.
Becker said he thought sales tax would level out by July, but it continues to slide.
“Right now we are working on the revenue forecast, and with the number bouncing around a bit it is kind of diffcult to make an accurate forecast. But I think we are all in the same boat,” Becker said.
Bentonville’s sales tax revenue dropped $40,424 this month compared with the same month last year. The city received $696,474 compared to $736,899, a drop of 5.5 percent.
Bob McCaslin, Bentonville mayor, said measuring sales tax at 30-day intervals doesn’t provide a good picture of the fi nancial situation.
“We are about $400,000 over budget in sales tax revenue for the year. The ship is looking good when you are over budget. Four hundred thousand is just a nice cushion in a $100 million budget,” McCaslin said.
Bentonville’s sales tax is diffcult to track because of the streamline sales tax. One month the city may be up 40 percent and down 5 percent the next.
“I’m comfortable that the staft put together a realistic budget and we live by our budget,” McCaslin said.
Springdale recorded a sales tax downturn of 2.4 percent in July. Last year the city received $845,813, compared to $825,602 in July 2010, a difterence of $20,211.
“For the first seven months of the year we are down $52,000 from what we budgeted,” said Wyman Morgan, Springdale fi nance director. “We budgeted less this year so we have a little safety margin.”
Springdale’s sales tax revenue was ahead of last year in January and March, an improvement for the city. Sales tax revenue dropped for more than 30 consecutive months before having a positive number compared to the previous year.
“And there have been some really close months this year when we were down less than 1 percent over the previous year,” Morgan said.