Northwest Arkansas governments see tax revenue rising; some businesses still struggling

Oxford Haney, 7, sits in a barber chair April 2 as Rebecca Connor, owner of RCÕs Hair Shop and Tanning, cuts his hair in the shop in Farmington. Go to nwaonline.com/210412Daily/ for today's photo gallery. 
(NWA Democrat-Gazette/Andy Shupe)
Oxford Haney, 7, sits in a barber chair April 2 as Rebecca Connor, owner of RCÕs Hair Shop and Tanning, cuts his hair in the shop in Farmington. Go to nwaonline.com/210412Daily/ for today's photo gallery. (NWA Democrat-Gazette/Andy Shupe)

City and county governments in Northwest Arkansas continue to see growing sales tax revenue in 2021 as they have throughout the covid-19 pandemic.

Sales tax revenue received in March by Fayetteville, Springdale, Rogers and Bentonville, as well as Benton and Washington counties, showed strong growth, according to local officials.

"Rogers is normal, the rest of it is crazy," Casey Wilhelm, financial administrator for Rogers, said of the March sales tax receipts. Sales tax revenue received by the cities and counties in March represents sales by merchants in January.

Rogers received about $1.7 million in revenue from the city's 1% sales tax in March, up 4% over the $1.6 million the city received in March 2020, according to information from the state.

Bentonville received about $1.6 million, up 47% from $1.1 million.

Springdale collected about $1.5 million, up 21% from $1.2 million.

Fayetteville got almost $2 million, an 11% increase from $1.8 million.

Benton County received about $975,000 in March, up 16% from $801,000 in March 2020.

Washington County received about $727,000, up 16% from $627,000.

Wilhelm said population growth has continued in Northwest Arkansas over the past year, driving growth in construction and consumption of basic goods that has kept the local economy going.

She said Rogers lagged behind the other cities at times, as it did in March, because Rogers relies on people spending on entertainment, dining out and discretionary buying and shopping as a large part of the city's economy. Spending in those areas, particularly entertainment and dining, dropped during the pandemic when businesses like restaurants were limited in capacity because of social distancing guidelines, she said.

She thinks the area's economy will continue to grow with more people being vaccinated for the covid-19 virus and restrictions being relaxed or dropped on social gatherings and travel. She noted, however, local spending could suffer if people decide to travel more outside the area.

Paul Becker, financial administrator for Fayetteville, said he also thinks people are beginning to return to their pre-covid habits of spending and socializing. He is already seeing some growth in sales in restaurants.

"I think there is some pent-up demand," Becker said. "People are basically social animals, and people are looking to get out. They're tired of being isolated."

Becker said while he sees encouraging signs, like growth in revenue from parking on Dickson Street and downtown, other businesses will need to change before the city returns to "normal."

"The Walton Arts Center hasn't opened up yet," he said. "There are other things that aren't fully open. We do have a way to go, but we continue to be on the right track."

Rebecca Connor, owner of RC's Hair Shop in Farmington, has one of those businesses that hasn't fully rebounded. Connor said when the pandemic hit, her business and others like it were closed for six weeks. They were allowed to reopen under guidelines that limited capacity. Her business started to improve in the past few weeks, she said.

"It has been a very rough year," Connor said. "My business was down 30-40%, and January was one of the slowest months I've had in years. In mid-February, business started to pick up some. I'm working more hours now."

Connor said she thought her business would do better given the number of longtime, regular customers. She initially thought the pandemic would be like the recession of 2008.

"Everyone's going to get a haircut, right? So I thought my business was recession-proof," she said. "It wasn't pandemic-proof."

Officials in Benton and Washington counties said they may be getting an unanticipated boost from the health emergency. The 2020 Census was delayed by the health emergency and the results are not expected until summer or early fall this year. Both counties share the revenue from the countywide 1% sales tax with the cities on a per capita basis and have projected a drop in revenue as the county's share of the population decreases.

Washington County Treasurer Bobby Hill said the 2010 Census results were known in March 2011, and the percentage of revenue shared dropped at that point. Hill said the decrease in the county's share of revenue may not take effect until September or October, giving the county a boost of about $300,000 to $500,000.

"In the past, generally speaking, we've lost about $1 million in the first year after a census," he said.

Hill has projected the county's sales tax revenue at $7.4 million for 2021, dropping from the $8.6 million received in 2020.

Brenda Peacock, Benton County's comptroller, said the delay in getting Census information, if the final numbers are not in before September, could give the county an extra $450,000. Peacock has projected Benton County will receive about $10.5 million in revenue from the 1% sales tax in 2021, down from $11.2 million in 2020.

Jake Harper, finance director for Bentonville, agreed some trends may point to a return to more normal spending habits. Bentonville could get a boost from travel or just from people going out to eat more often, he said.

"I would hope that our travel spending would pick up, if that's the case," he said. "We have Crystal Bridges, we have our trails for hiking, biking and walking. Restaurants and dining out is critical to the health of what we have going on in our downtown."

Wyman Morgan, Springdale's finance director, said the pandemic may change some spending habits permanently.

"People have gotten used to Zoom meetings or other ways of sharing information," he said. "I think the way we do business may change because of what we've been through."

Morgan noted the Northwest Arkansas Naturals baseball team, which plays its home games at Arvest Ballpark in Springdale, will be back this year. Their season last year was canceled because of the pandemic.

"The good news is we're going to play ball this summer. A lot of people are looking forward to that," he said.

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Sales tax revenue

Sales tax reported by cities and counties in March represents sales made by merchants in January. The merchants submit the taxes they collect to the state Department of Finance and Revenue after the end of each month. Once all of the tax money has been sent to the state, the department calculates the amount due to each taxing entity and sends that money to the local governments.

Source: Department of Finance and Administration

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