Sales tax revenue is a lagging economic indicator of consumer confidence and the most recent report from Northwest Arkansas cities shows fickle consumer attitudes prevailed throughout the summer months and may continue through the November general election.
Revenue reported in September reflects July sales remitted to the state in August. All of the cities in this report 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.
September revenue reported by the five largest commercial districts in Northwest Arkansas totaled more than $4.383 million, up a modest 2% from collections tallied a year ago.
2012 TAX COLLECTIONS (September)
(Data represents a 1% sales tax, compared to prior year period.)
Fayetteville: $1,466,887, up 5.61%
Springdale: $830,681, down 6.85%
Bentonville: $764,486, down 0.28%
Rogers: $1,094,479, up 7.5%
Siloam Springs: $227,304, down 2.1%
Source: Respective cities.
Businesses in Rogers and Fayetteville collected more sales tax in July, likely buoyed by back-to-school shopping as these two commercial districts contain the region’s largest retail centers.
Richard McComas, treasurer for the City of Rogers, said year-to-date the collections are roughly $700,000 above budget as retailers are consistently seeing steady traffic and sales against last year.
He said curiosity is mounting toward to the August collections which will be reported next month, since they will contain the grand opening at Cabela’s (Aug.30) – offset by the statewide tax-free weekend for families shopping for the clothes and school-related items.
“We are extremely pleased with the revenue collections this year as the economy is still recovering. Northwest Arkansas is doing a little than other places across the country and we just hope that continues,” McComas said.
Springdale was one of the three cities to post lower collections in July, but that hasn’t sent off any alarms among city administrators as revenue is up $300,000 over the past 12 months, according to Wyman Morgan, finance director for the city.
“Last year collections in July were up 13%, one of the highest months on record. When you compare the past several months and look at the larger picture, Springdale is still tracking ahead of budget. We are pleased with the surplus and feel the city is in good shape,” Morgan said.
Consumers are a fickle bunch and between July 1 and August 18 two separate consumer confidence readings flipped from a somewhat optimistic outlook toward pessimistic views with respect to business and employment prospects.
The Consumer Confidence Index is now at its lowest level since late last year (Nov. 2011), according to Lynn Franco, director of economic indicators at The Conference Board. That August report came on the heels of a July reading in which consumers were generally more optimistic about the short-term outlook.
Economists say the consumer confidence reading that is due out Tuesday (Sept. 25) will likely show a more fragile consumer willing to sit on the sidelines for big ticket items. This caution is linked to flimsy job markets and tenuous corporate income levels ahead of unpredictable tax structures and health care costs.
CUMULATIVE TAX COLLECTIONS
2012: $6.305 million
2011: $5.635 million
2012: $11.564 million
2011: $10.907 million
2012: $8.749 million
2011: $8.089 million
2012: $2.175 million
2011: $2.156 million
2012: $7.581 million
2011: $7.387 million