Northwest Arkansas sales tax revenue declines in June report

story by Kim Souza
ksouza@thecitywire.com

Consumers reined in spending across Northwest Arkansas in April which set sales tax revenue collections in the most recent report back 2.8% among the combined four largest cities in the region.

The individual city collection reports were mixed in June, which reflect sales tax collected in April creating a two-month lag in the reporting. Fayetteville, Springdale, Rogers and Bentonville cumulatively reported tax revenue of $4.325 million this month, down from $4.454 million in the year-ago period.

Each of the cities collect a 2% sales tax on good and services, 1% of that goes to repay debt and the other 1% flows into the city budgets for operating expenses. This report reflects the latter.

Sales Tax Revenue (June)
Bentonville: $714,355, down 26%
Fayetteville: $1,475,961, up 1.8%
Rogers: $1,184,283, up 0.2%
Springdale: $950,962, up 12%

Denise Land, finance director for Bentonville, said collections have been on a roller coaster for several years now. But the one important thing to remember is that year-to-date collections are better than what the city budgeted.

“We hope it continues,” Land said.

City officials, including Land, said there were some very strong months in early 2013, which are tough for comparison purposes, and the ups and downs month-to-month are not a surprise.

Springdale receipts captured the biggest bump upward in June, increasing more than $98,000 from the same month in 2013. It was the city’s highest revenue collection since prior to the 2008 recession.

Springdale Mayor Doug Sprouse said the increase was welcome and helped the city stay ahead of budget. He couldn’t attribute the gains to anything in particular except that maybe more residents were spending their money in the hometown.

“We believe the new Walmart Supercenter at Elms Springs road will help us retain sales tax dollars we may have been losing to other cities,” Sprouse said. “We are excited about other future developments in that area of the city and plan to reinforce some of the road infrastructure there in future months.”

Wal-Mart plans to open the new Springdale supercenter later this summer. It is one of 12 new building projects the retail giant has announced or finished this year in the two-county area.

The new Walmart AMP has Rogers city officials hopeful that sales tax revenue will continue to increase this summer along with the water park attraction which both make the city an entertainment destination.

Sales tax collections in Fayetteville grew by just $26,000 from a year ago, and city leaders said that does not begin to cover the economic losses sustained this winter as people were snowed in and businesses were closed.

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City finance director Paul Becker said Fayetteville is still playing catch-up from weaker reports earlier this year. He expects the revenue swings to flatten out in the coming months.

Sales tax revenue has a strong correlation with consumer sentiment. U.S. consumer sentiment rose in April, according to the Michigan Sentiment Index. The final April reading on the overall index of consumer sentiment came in at 84.1, beating an expectation of 83.0. The number was the highest reading since July 2013.

"Perhaps the more important question is whether consumer confidence will show greater resistance to the backslides that have repeatedly occurred in the past few years," survey director Richard Curtin said in a statement. "Resilience is dependent on positive long term economic expectations. While near term expectations have improved substantially, longer term expectations for personal finances as well as the overall economy have not improved as much.”

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