Sales tax collection down in Tonganoxie
A good April distribution of sales taxes to the city of Tonganoxie reversed a disturbing trend in the year’s opening three months.
Figures available through the Kansas Department of Revenue show the city’s sales tax distribution fell by 20.4 percent in the first three months of 2010, when the state distributed $141,765 in sales tax to the city. That compared to $178,080 for the same period of 2009 and $184,092 in the pre-recession year of 2008.
April showed sharp reversal in the trend as the city received 9.3 percent more in sales taxes than it did in the same month the previous year. This month, the city received $59,482 in sales taxes compared to $54,414 in April 2009.
The city’s sales tax of 1.33 cents per dollar spent has two components: the 3/4-cent tax dedicated to paying off debt for the water park and .58 of a cent that provides revenue for the city’s general fund.
City Administrator Mike Yanez said the city’s 2010 debt payment on the water park this year was $331,213.
For the 3/4-cent sales tax to provide that revenue it would have to average $110,404 every four months. Figuring that just more than 56 percent of the city’s sales tax distribution is dedicated to the pool’s debt service, that indicates the city collected about $113,486 for the fund through April of this year.
The good April distribution put the pool fund back in the black. But Yanez conceded the city’s sales tax performance was worrisome.
“There’s always a concern,” he said. “Seeing how sales taxes have flattened out, you do have to worry about the fund for the poll as well as the portion to help the city general fund.”
Yanez said any shortfall from sales tax revenue for the debt obligation would have to be made from the city’s other revenue funds. He and city department heads were flexible and willing to make the needed adjustments to any revenue shortfalls, Yanez said.
“It’s a team effort to weather the storm,” he said. “We want to avoid layoffs to personnel ranks because we are at minimal ranks right now.”
The city has lost no significant retailers in the last year. Yanez speculated before the release of April numbers the downward trend in sales tax receipts reflected bad weather and a continued bad economy.
“I think part of it was we had such a prolonged winter a lot of people just weren’t out shopping,” he said. “Another thing is people are being more cautious with discretionary spending.”
Charlie Ussery, owner of Himble Lumber and Building Supply, said sales have been picking up at his business with the spring weather.
Ussery said the slump in housing starts probably contributed to the sales tax slide. The city has issued only one new home permit this year.
The building of a single home generated “tens of thousands of dollars” in sales in building materials and many times such things as household appliances and furnishings, Ussery said. And the the state’s point of delivery sales tax collection system, that produced revenue for the city, he said