The local economy showed signs of strength well into the second quarter of 2012 as Northwest Arkansas businesses collected 6.83% more in sales tax during May which returned $4.391 million to the region’s five largest retail markets in July, according to the Arkansas Department of Finance report released this week.
The cities of Bentonville, Rogers and Fayetteville each posted steady gains from a year ago, while Springdale collections were flat and Siloam Springs fell a little short in the period.
July tax revenue reflects May sales remitted to the state in June creating a two-month lag in the city reporting. Each of the five cities collect a 2% sales tax which is divided evenly between the cities’ general operating fund and the repayment of bonds. This report tracks the city’s portion, or 1% of the tax collected.
2012 TAX COLLECTIONS (July)
(Data represents a 1% sales tax, compared to prior year period.)
Bentonville: $751,886, up 11.64%
Fayetteville: $1.442 million, up 7.04%
Rogers: $1.099 million, up 11.3%
Siloam Springs: $231,162, down 1.21%
Springdale: $866,858, down 0.66%
Source: Respective cities.
Denise Land, finance director for the City of Bentonville, said 2012 is off to a great start with tax collections running nearly 20% ahead of 2011 through May.
“To be fair, 2011 was a down year but we are also running ahead of the 2010 collections and we hope it continues,” Land said.
She hesitates to give all the credit to Crystal Bridges, but she knows the world-class museum has certainly moved the needle forward since opening Nov. 11, 2011. More than 350,000 patrons have visited Crystal Bridges this year, almost 450,000 visits have been recorded since opening, according to Diane Carroll, media spokeswoman for the museum.
“We are running ahead of budget this year and it feels good to see more people out and about, I just hope that trend continues because with record heat and drought lots of folks are spending a good deal more on utility costs which could hinder retail sales and tax collections in the next few months.” Land said.
Economist Viktoria Riiman, at the University of Arkansas Center for Business and Economic Research, said sales tax collections have mirrored consumer confidence readings.
“Consumer confidence grew consistently through the first five months of 2012 with a high 79.23 index reading in May. That reading slid to 73.2 in June and to 72.0 in July which is believed to be closely linked to jobs numbers,” Riiman said,
Given this region has had better job numbers that the state and nation, Riiman says Northwest Arkansas has the potential to mitigate downward pressure on tax collections.
The local unemployment rate stood at 5.7% in May, down from 6.1% in the year-ago period. The May jobless rate is at the lowest level since 2008, according to the Bureau of Labor Statistics.
City leaders say there is still a fair about of uncertainty in the world financial markets but are happy to report their own budgets are in good fiscal shape. Springdale Mayor Doug Sprouse said the city is moving ahead with lots of new infrustructure projects that will facilitate future growth west of Interstate 540.
“Our manufacturing sector is adding jobs and our retail is holding its own, we just need more of it,” Sprouse said.
Sales tax revenue is up 4.6% through May and Sprouse said the city is operating well under budget, with collections running $233,291 ahead of last year.
Fayetteville posted strong gains in the month and is up more than 7.52% in collections this year. The 2012 year-to-date budget impact for the first half of the year is a total of $927,648, according to Kevin Springer, budget director for the city.
Rogers city officials are happy to see tax collections stay above $1 million in May. The city made the million-dollar club for the first time last month after flirting with the level for several months.
Tax collections in Rogers rose 11.3% in May and tracked 9.27% higher for the first half of the year. City officials expect this number to rise with the anticipated opening of Cabela’s next month and Fresh Market this week.
CUMULATIVE TAX COLLECTIONS
2012: $4.884 million
2011: $4.082 million
2012: $8.652 million
2011: $8.046 million
2012: $6.525 million
2011: $5.971 million
2012: $1.720 million
2011: $1.659 million
2012: $5.075 million
2011: $4.852 million