The Joplin Globe, Joplin, MO

Local News

August 12, 2012

Local sales tax revenue climbs

JOPLIN, Mo. — After the May 2011 tornado, Joplin city officials thought local sales tax revenue would continue the downward spiral that showed up in 2009, following the nation’s economic slide that began in 2008.

That didn’t happen.

Instead, sales tax collections in the fiscal year that ended Oct. 30, 2011, actually rose.

In Joplin, sales taxes ranging from one-quarter to a full cent support a number of initiatives, including parks and stormwater improvements, capital projects, transportation and public safety. But the largest piece of the pie is Joplin’s 1-cent sales tax that supports the city’s general fund. It closed the last fiscal year at nearly $12.3 million, up from a little more than $11.5 million in 2010.

Joplin’s fiscal year runs from Nov. 1 to Oct. 31.

A city budget for this fiscal year took a conservative approach and estimated a decrease in collections of more than 1 percent.

That has not happened, either.

Instead, it looks like collections this year so far are up more than 9.3 percent, according to City Manager Mark Rohr.

With its August payment, the city had taken in more than $10.6 million in the first 10 months of the fiscal year. That will leave two more months of collections to come in the city’s current fiscal year.

If sales tax revenue stays the course, it could translate into an additional million dollars of revenue for the city’s general fund, as well as additional money for the other funds.

Rebound

City officials attribute the increases to repair, rebuilding and restocking that residents have done since the tornado, as well as purchases and other spending made by volunteers and visitors.

But tornado recovery may not be the only explanation. Other Missouri cities and the state of Missouri have seen increases too, which they say signals that economic activity may be rebounding from the 2008 plunge.

Rohr and Joplin’s finance director, Leslie Jones, are preparing to release the budget for the next fiscal year.

In his letter that will be released by the city later this month with the 2013 budget, Rohr noted that the “post-tornado spike” in sales tax revenue makes it difficult to tease out meaningful trends that help predict future revenues.

He also noted that research on other communities that went through large-scale disasters indicates there will be “a leveling off of the revenue spike.”

Jones said she thinks the city may be at the end of the tornado spike cycle, although like Rohr, she said it’s hard to say what will happen.

“I feel we’re high because of the tornado,” Jones said of this year’s collections. “Everybody’s replacing things and we have visitors. It’s hard to predict what level it will come back down to. We are seeing it starting to trend back down now. It’s a matter of where we’re going to land, where our normal is going to be.”

Starting the climb

While other cities and the state of Missouri also are reporting increases in sales tax revenue, Joplin’s numbers are ahead of the curve.

Springfield’s fiscal year ended June 30 with an increase of 8 percent, said Mary Mannix Decker, the director of finance there.

“That’s a really large increase,” she said. She checked on what created the increase and found that several businesses had been in arrears and had been making payments to catch up. “We tried to factor that out and feel the real growth is around 4 percent. It’s definitely the best numbers we’ve had” in recent years, Decker said.

The city, like Joplin, felt a pinch in 2009 when sales tax revenue fell 7.6 percent. It came up a little more than 2 percent in 2010.

“So our numbers are starting to climb back to where they were before the recession hit. We’re back around the level it was in 2008,” she said.

She attributes the rebound to a decline in unemployment and the resulting spending of people who have jobs again. Another factor could be resumed economic growth in the business sector, she said.

Permanent improvement

A city similar to Joplin in population, Blue Springs is expecting a gain this year of about 3.5 percent after a couple of years of decline.

“What is unique about Blue Springs is that it has been opening new retail stores,” like T.J. Maxx, said Christine Cates, assistant city administrator. “We attribute the increase to those new shopping opportunities.”

“We had a couple years like the 2009 fiscal year when we had seen the lowest collections. The biggest drop-off then was in the motor vehicle tax,” she said.

“We had to monitor the budget closely” then, she said. Like Joplin, city employees went without raises and many expenses were cut when the decline hit.

“Hopefully some of that is gone and we’re seeing permanent improvement in those revenues,” Cates said.

The increase in Blue Springs is close to the state’s revenue increase from sales taxes. As of June, the state had taken in $1.87 billion from sales taxes, up from $1.8 billion last year. That is a rise of 3.8 percent, according to figures from the state’s budget director, Linda Luebbering.

‘Sales tax bubble’

Counties, too, are watching as each month’s tax collections arrive to see if there’s a trend.

In Jasper County, auditor Richard Webster said collections for the calendar year so far are up 8.22 percent — $4,142,000, compared with $3,828,000 at this time last year.

“I think we’re still in a sales tax bubble because of the increased economic activity in Joplin. I can’t tell you how long it will last,” he said. He estimated $4.9 million in collections this year when he constructed the county’s budget. “I think we will meet that goal with the remaining four months. I suspect we will collect $5 million, which will be a slight increase.”

In Newton County, Commissioner Marilyn Ruestman said collections there are up 5.1 percent for the year.

Collections so far this year have been $3,851,932 compared with $3,067,183 this time last year.

“We have noticed a leveling off and so what we’ll do is really pay a lot of attention in the next two or three months to see if there’s a trend.”

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