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FAYETTEVILLE -- Increasing sales tax revenue is a reflection of Northwest Arkansas' strong economy and is likely to continue for the foreseeable future, according to a University of Arkansas economist.

Mervin Jabaraj, interim director for the Center for Business and Economic Research, said the region's economy is growing along with most of the state and the nation and much of the world.

Sales tax

Sales taxes are collected at the local level and the money sent to the state Department of Finance and Administration, which then allocates the money to the taxing entities. The process takes about two months so local governments receive revenue in November for sales taxes collected in September.

Source: Staff report

"We are in our 101st consecutive month of economic growth," Jabaraj said. "That's just a few months away from being the second-longest ever. As long as the economy chugs along nationally, Arkansas and Northwest Arkansas should continue to do well."

Jabaraj said other economic indicators, including the state unemployment rate, are also positive. He said Arkansas has had several large manufacturing announcements, with most linked to overseas markets.

"Those kind of announcements bring jobs and pay taxes," he said. "A weaker dollar has pushed exports up, and in the past year or so, most of our trading partners have done well."

Arkansas' finance officials said better than expected individual income tax collections helped push revenue above forecast last month.

The Department of Finance and Administration on Monday said the state's net available revenue in November was $379 million, which is $1.7 million below the same month last year but $9.4 million above forecast. The state's net available revenue so far for the fiscal year that began July 1 is $2.1 billion, which is $26.8 million below forecast. Sales tax collections for November were above the same month last year but below forecast. Individual income tax collections were above the same month last year and above forecast.

Locally, sales tax revenue is up in the area's four largest cities and Benton and Washington counties.

Bentonville Mayor Bob McCaslin and officials in other cities credit the increase to the area's growth. Bentonville has received $10,110,950 in revenue for the year-to-date, up from $9,648,743 for the same period in 2016, according to the city. Sales tax collections are through September.

"Some of it is building, as building does generate sales tax," McCaslin said. "A lot of it is the hospitality industry, and retail is also strong."

County Judge Barry Moehring said a member of the Federal Reserve Bank recently called Northwest Arkansas "the Gold Coast of the Midwest."

Moehring said, "Overall, the entire region is enjoying a nice level of prosperity."

Paul Becker, Fayetteville's chief financial officer, also credited the region's overall economy for his city's growing sales tax revenue. Fayetteville's 1 percent sales tax brought in $30,548 or 1.73 percent more in September than the same month last year, according to the city. Year-to-date receipts of $17,802,213 are ahead of 2016 by $615,891 or 3.58 percent.

The city's receipts are about $1 million ahead of what was budgeted for the year-to-date, Becker said.

"It's a little less than we'd like, but it's still positive growth," Becker said.

Wyman Morgan, Springdale's director of administration and finance, said the city's sales tax collection is up nearly 5.5 percent so far this year, compared to 2016.

The city has received $13,272,772 in 2017, according to figures from Springdale. For all of 2016, the figures show the city received $13,189,898.

Morgan said the Sam's Club opening in Springdale likely explains some of the city's increased sales tax revenues. He also said Amazon's decision to collect local sales taxes may have helped.

Amazon started collecting taxes and remitting the money to the state March 1.

In Rogers, the city's sales tax revenue is also increasing, according to Casey Wilhelm, the city's finance director. Rogers has received $16,921,033 for the year-to-date, according to Wilhelm. For all of 2016, the city received $17,260,350.

"I'm estimating we'll be around $18.3 million at the end of the year," Wilhelm said. "Our budget was $16.5 million. We're very conservative on our budget here in the city. It will just make our reserves grow."

Wilhelm said no specific events or activities were factors. "I really think this is just overall growth and population growth," Wilhelm said.

She also mentioned the Amazon sales tax collection but said those figures aren't broken out by the state so she can't say how much of an impact it may have had.

Randall Bauer, director of Philadelphia-based PFM Consulting Group, told the Legislature's tax overhaul task force last month he wants to wait a few months before trying to estimate how much Amazon has paid in sales tax based on its sales to Arkansans. Bauer noted that state "tax folks can't divulge what Amazon as a single corporate entity is paying to the state," under state law.

Brenda Guenther, comptroller for Benton County, said sales tax revenue is ahead of 2016. The county has received $8,120,839 for the year-to-date, which is about 7 percent more than the same period last year, according to Guenther. The county budgeted $8.1 million in sales revenue for 2017.

Washington County Treasurer Bobby Hill said the county has collected $6,719,796 year-to-date, up from 2016 by 6.7 percent. For the full 12 months of last year, he said, the county received about $6.9 million.

"So we'll easily surpass our projections for 2017," he said.

NW News on 12/10/2017

Print Headline: Northwest Arkansas sales tax revenue reflects national, global economy

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