Sales tax revenue improves across the region

Consumers across Northwest Arkansas continue to boost local sales tax collections upward through the first three months of this year, despite the adjustment to higher payroll taxes and a colder winter season.

The cities of Fayetteville, Springdale, Rogers and Bentonville each report year-to-date collections running ahead of budget and above last year’s results.Through the first three months of this year cumulative collections totaled more than $21.30 million, up 5.42% from the same time in 2012.

Collections reported in May were for sales generated in March creating a two-month lag in the data. Each city collects a 2% sales tax that is split with 1% going to the general operating funds which is tracked by this report and 1% is set aside to repay debt.

Revenue Collections through May
Rogers $5.992 million, up 9.95%
Fayetteville $7.78 million, up 4.74%
Bentonville $3.632 million, up 3.8%
Springdale $4.275 million, 2.12%

City officials are pleased with overall collections. And while some months have been stronger than others, each of the larger cities polled said their budgets are in good shape heading into the summer.

The smaller cities in the region including, Siloam Springs and Lowell report mixed results so far this year. Siloam Springs has collected $1.171 million in tax revenue for the city budget, down 3.8% from a year ago. Lowell has seen steady growth with $1.114 million collected this year, up 31.6% from the year-ago period.

As noted, the sales tax report is a lagging indicator by about 60 days. Consumers started this year facing higher payroll taxes, to the tune of about $1,000 a year for most households earning at least $50,000. Retailers like Wal-Mart and Target reported softer overall sales across the country during the same period, while restaurant sales had it worst quarter in several years, according to NPD group.

Economists say consumers were helped by lower gas prices and virtually no food inflation during the first three months of 2013, which maybe why overall sales receipts were slightly higher for discretionary spending.

As the cities look toward future collections, consumer sentiment climbed in May to its highest level in nearly six years. The University of Michigan sentiment index rose to 83.7, it’s highest mark since July 2007. Economists said this gain in confidence shows consumers are overcoming the effects of higher taxes, federal spending cuts that threatened to take a toll on jobs.

Locally jobs numbers are improving, according to Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas.

Non-farm jobs in the local metro area 219,800 at the end March, up from 209.700 jobs in the same month last year, according the Bureau of Labor Statistics. The local unemployment rate in March was 5.5%, down from 5.6% and 6.3% in the two prior-year periods of 2012 and 2011, respectively.

Better job numbers are also bringing more people to the region, which has in turn helped demand for housing and should continue to spur on  traffic to retail and food outlets in the coming months.