Leader Blues

Tuesday, October 07, 2008

TOP STORY > >Tax collections go up for cities in tough times

Leader staff writer

The poor economy is helping area cities fill up their coffers with local sales tax collections.

Jacksonville’s coffers are up, according to the city’s finance director Paul Mushrush.

Higher prices on staple items, along with an influx of hurricane refugees has helped push Jacksonville tax collections hundreds of thousands of dollars ahead of last year’s totals.

Sherwood is also seeing an increase in its tax totals.

The good news was first announced at the last Jacksonville Advertising and Promotion Commission meeting where Mushrush said collections of the commission’s hotel-motel room tax was substantially ahead of last year, and the best in the four years of the tax.

He also said the commission’s prepared- foods levy, known as the hamburger tax, also continued to come in strong.

But the news on the city’s two-cent tax andits share of the county’s one cent tax are even better.

Through September, the city has collected $5,530,855 from its two-cent tax, more than $400,000 ahead of last year’s take of $5,120,969 through the same nine months.

Jacksonville is one of eight county cities that share in the county’s one-cent sales tax. Jacksonville receives about 8.27 percent which this year, through September, amounts to $4,828,980, running just under $200,000 ahead of last year’s collections for the same time period of $4,640,138.

In Sherwood, the city has brought in, through August, $2.9 million on its one-cent sales tax, $70,000 more than the $2.83 million for the same period in 2007.

Sherwood’s share of the county tax totaled to $3.47 million through August, nearly $240,000 ahead of last year’s total for the same time period, $3.33 million.

Mushrush credits higher gas prices for generating the higher tax amounts. “I do a lot of the grocery shopping for my family and the price of such staples as toilet paper have doubled recently,” he said. Mushrush said the higher prices mean a higher total bill which translates into more tax being charged and collected.

Jacksonville’s tax fortune is not completely built on a struggling economy. “We’ve got the air show next weekend and that will bring in thousands of people pumping money into our city,” Mushrush said, adding that Jacksonville hotels are already filled for the open house weekend.


Some of Sherwood’s increase is from tax collected off sales of the new Wal-Mart Supercenter located near Highway 107 and Maryland Avenue.

Through August, Jacksonville’s A&P commission’s two-cent hotel tax had generated $56,508, more than $5,000 above last year’s amount.

The two-cent hamburger tax last month came in at $449,437, one of the strongest months since the tax was first collected last October.

Sherwood has no hotel-room tax, but does have a two-cent hamburger tax. Through August, the hamburger tax has brought in $367,471 for Sherwood compared to $330,011 for the same period last year.


A change in the way sales tax is collected doesn’t appear do have hurt Cabot, where revenue is up about $7,000 a month.
Since the beginning of the year, local sales tax is collected at the point of delivery, not where the merchandise is sold. For Cabot, that means the city doesn’t get the tax money for material purchased at lumber yards inside the city limits and delivered to building sites elsewhere. But the city would collect revenue for any appliances or other merchandise purchase elsewhere but delivered to Cabot.

“We’re still looking at that trying to develop a trend,” Marva Verkler, city clerk-treasurer, said this week. “We’re still trying to decide if it’s hurting us or helping us. We’re hoping it helps.”

This much is clear, the city received $305,000 from the state on Sept. 25 for taxes collected in July, which is about $7,000 more than the monthly average for 2007. So far this year, the city has collected $2.745 million, she said.

The city’s 1.5 percent hamburger tax brought in $51,500 in September compared to $47,000 this time last year, she said.


The change in the tax law, which was really intended to level the playing field between Internet and catalog stores and local brick- and-mortar businesses, prompted the city of Austin to pass a sales tax.

Building was booming there last year and Mayor Bernie Chamberlain wanted her city to get its share of the sales tax revenue from building materials delivered to subdivisions in Austin. But the sales tax can’t be collected in a city that doesn’t have a sales tax, so the voters approved a one-cent tax that went into effect Oct. 1.

Chamberlain said it appears the economy has not slowed construction very much in Austin. The issuance of building permits is down, but not much, she said. Until the tax money starts coming in near the end of the year, it won’t be known how much the city will gain. But the mayor said she hopes it will be enough to pay for the two additional police officers who have been hired and water projects that are ongoing. Street repairs also are planned if the tax revenue meets expectations, she said.


Ward’s local tax revenue has increased, according to information available from the Arkansas Department of Finance and Administration. In July 2007, the city’s tax brought in $11,283 compared to $13,159 in July 2008.

Local tax revenue also has increased in Beebe, from $67,602 in July 2007 to $79,694 in July 2008.


No one’s disputing that the economy is contracting and there are tough times ahead, but through the first nine months of
2008, tax revenues in Lonoke County are greater than they were a year ago, according to Karol DePriest, the county treasurer.

“Nothing is hurting us much right now,” said DePriest, but September tax collections won’t be turned back from the state until sometime in December.

By law, the sales tax money goes into the county road, solid waste and library accounts, she said.

The county general funds, which support most everything else, are from tax, property tax and personal taxes, and it arrives in the form of turnback from the state.

Collections this year through September are $856,067, up from $771,335 last year, DePriest said.

Even though there’s an additional $33 million in new assessed value on the county books compared to three years ago, that only translates to about $115,000 in new revenue, she said.

The primary factors in the amount of those revenues is the appraised evaluation of homes in the county, the number of new homes built and appraised and the amount of millage residents pay.

She said residents didn’t seem to be more delinquent than usual in paying their taxes.

“We may know more next month,” she said.

County residents approved a one-year, one penny sales tax in May and collection of that money begins in October, DePriest said, with the first money hitting county coffers in December of January.

Most of Arkansas in general and Lonoke County in particular never experienced an inflated housing-price bubble, according to County Assessor Jerry Adams.

So far, as the county’s contractor finishes up the most recent three-year reappraisal, the most significant change is not the value of the homes being reassessed, but the value of new homes being assessed for the first time.

“They tell me they’re still building houses at Cabot at a pretty rapid pace,” Adams said. “The market shows it hasn’t been affected in this county yet.”

“If the economy stays the way it is, the sales will be going down when (appraisers) set values for the new three-year cycle,” Adams said.

But for now, there’s been a 38 percent growth in the appraised value of real estate in Lonoke County over the preceding three-year reassessment compared with the three-year appraisal completed in 2005.

Leader staff writers John Hofheimer and Joan McCoy contributed to this article.