Bridgeport sales tax numbers not the whole story

By Bob Buckel | Published Saturday, February 15, 2014
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The second set of sales tax numbers for 2014 went public Wednesday – and they don’t look great for the city of Bridgeport.

Bridgeport took in $228,332 from the sales tax in February, down nearly 30 percent from last year’s $323,256. After two months, the city already trails last year’s collections by $170,248 or 28.7 percent.

But those numbers don’t tell the whole story.

It’s difficult to pinpoint what’s behind the two-year sales tax decline in Wise County’s second-largest market. By law, the state can’t reveal the numbers for individual businesses, although a spokesman in the Comptroller’s office said most of the February decrease was attributable to two companies that reported lower sales tax on purchases or sales compared to the same time last year.

We can, however, illustrate how the city budgets sales tax revenue to deal with the shortfall.

For starters, the city only gets 1 cent of that 1.5-cent sales tax. A half-cent goes to the Economic Development Corp. (EDC).

It also helps to understand that the city’s budget is written based on a fiscal year that starts in October. If you reach back and take in the last three months of 2013, things look much better this fiscal year because November and December were strong months.

But City Administrator Brandon Emmons said, given the declining trend, the city budgeted a 15-percent decline in sales tax revenue this year.

Consequently, through five months the city is actually ahead of budget.

“Right now, for the fiscal year, we’ve actually met or exceeded our projected amounts in every month except for the last month, when we were under budget by $15,000,” he said. “Through five months of this fiscal year, we’re about $15,000 a month ahead of budget.

“We budgeted $145,000 a month, and we’re averaging $158,000 so far.”

Emmons said sales tax money goes into the city’s general fund, which supports the police department, city hall, the library, parks and streets. The city’s other big functions – water, wastewater and electricity – are managed separately and funded by the revenue they generate.

They don’t depend on sales taxes at all.

And while sales taxes fund 34 percent of that general fund budget, the city’s total budget for FY 2013-2014 is $22.424 million. Sales taxes make up less than 10 percent of the overall budget.

So, despite the dire numbers, Bridgeport is OK.

“With the trends we’ve identified and the arrangements we’ve made, we’re doing fine from an operational standpoint,” Emmons said.

He also noted that the city has contingency policies, adopted annually as part of the budget, that specify how administration will respond to drops in sales tax revenue.

“We have those policies built-in, but we don’t expect to have to do that this year because we’ve already accounted for that in the budget,” he said.

February sales tax figures represent December sales reported by monthly tax filers, as well as October, November and December sales by businesses that report quarterly.

It’s likely the major ice storm early in December cut into businesses’ Christmas sales throughout the county, even in cities that saw a gain.

Bridgeport, New Fairview, Chico and Newark all saw declines in sales tax revenue through the February reporting period. The county’s other eight cities saw increases – from Decatur’s 4.4 to 40 percent in Lake Bridgeport, 29 percent in Paradise, 28 percent in Rhome, 27 percent in Alvord and 24 percent in Aurora.

The county’s half-cent sales tax brought in $477,666 – up nearly 10 percent compared to a year ago. That left the county trailing last year by just 3.4 percent after two months.

Statewide, sales tax revenue in January was $2.3 billion, up 8.3 percent compared to January 2013.

State Comptroller Susan Combs said sales tax revenue has increased statewide for 46 consecutive months.

Sales Tax

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