Northwest Arkansas sales tax revenue up in September report

Consumers opened their wallets and purses a little wider mid summer, perhaps spurred on by lower utility bills and lower fuel prices, which boosted the region’s largest cities’ sales tax revenue reported this month. Sales tax collections among the region’s seven largest towns totaled nearly $5.5 million up fractionally against the $5.02 million collected a year ago.

But, the three largest cities fared better than that.

Three for the four largest towns in the Benton and Washington counties reported revenue growth for September, compared to the prior year, while Bentonville’s tax revenue was down 17.4% from September 2013. Fayetteville, Springdale and Rogers together posted tax revenue of $3.705 million in September, up 6.3% from the same month last year.

The September revenue is comprised of a 2% local sales tax charged on goods and services purchased in July. That tax is remitted to the state in August and the cities receive their portion of the tax in September, creating a two-month lag in the reporting. Each of the cities use half of the tax for debt repayment and the remaining 1% goes into their city budgets. This report reflects the latter.

Springdale had one of its better months as the city continues to build momentum around new building projects, expanded retail offerings and its downtown development, according to Mayor Doug Sprouse.

“In some respects we are playing catch-up, but we are excited about all of the building investments we are seeing in the city downtown and on the west side,” Sprouse said.

Springdale’s sales tax revenue totaled $975,853 in September, up 8.2% from a year ago and 17.4% higher than the same month in 2012. The mayor said he’s pleased to see a growing trend develop after a slow start earlier this year. The city’s revenue has been up over the past seven consecutive months with double-digit returns in three of the past four reporting periods.

“These gains do not take into account the new Walmart Supercenter or expanded Harp’s Marketplace. I am eager to see how the new supercenter will impact our numbers. In October, we will see about a half-month of collections from the new Walmart store, with the first full month impacting November revenue,” Sprouse said.

He said when a supercenter opens in a town the impact to sales tax is generally $1.5 million to $2 million annually. But given the city already has one store, he is not sure what the impact will be from the second store.

“I believe we were losing some business to the Rogers supercenter just up the road, which should now be kept in Springdale. Next year we will have the new Neighborhood Market come online and in 2016 the Sam’s Club will open giving Springdale more needed retail exposure,” Sprouse said.

Retail has never been a problem for Rogers and its dynamic retail and restaurant presence has kept sales tax revenue growth numbers high for most of this year. September was no different as the city collected $1.25 million in tax revenue, up 11.8% from the same month last year.

City officials attribute much of the recent growth to the Walmart AMP which opened in June. Rogers tourism officials said July was also an active month for conventions and tournaments played in the city which brought in more out-of-town guests for the day and overnight as well.

David Lang, general manager for the Embassy Suites in Rogers, recently told The City Wire his hotel was having a great summer because of robust business travel and an uptick in weekend conventions and meeting groups. He said the hotel has actively recruited weekend business.

“The AMP is also helping to drive traffic to the hotel. We are finding some people would rather get a room and walk over to the concert venue than hassle with parking and traffic, especially if they want to enjoy cocktails,” Lang said.

Casey Wilhelm, finance director for the city of Rogers, has budgeted $14 million in sales tax revenue for this year and collections are running about 3% over projections. 

“I expect total collections for the year will be up slightly and I have budgeted for a very modest increase for 2015. The region is growing and there is building investments being made as our jobs numbers and consumer confidence improves,” Wilhelm said.

Fayetteville reported a modest 1.3% gain in sales tax revenue, collecting $1.482 million in September, compared to $1.465 million in the same month last year. 

City officials report the September revenue was below budget but said they anticipate a strong fall season with University of Arkansas’ growing enrollment and perhaps more visitors for UA football behind a winning team.

Denise Land, finance director for the city of Bentonville, told The City Wire she is not provided with explanations of the month-to-month fluctuations in their numbers.

Bentonville’s September revenue totaled $697,318, down 17.3% from a year ago. It was the lowest collections for the month of July since 2009. The city’s sales tax revenue has been down in six of the past eight months. Through the first eight months of this year the city has collected $6.609 million, short of the of $7.156 million collected during the same period of 2013. The city reports that September was the first month this year that it came in short of the budgeted $750,000 amount. Land reported that even with the light September revenue the city is still more than $600,000 over budget for the year.

Three of the regions’ smaller towns, all in Benton County, reported mixed revenue results this month.
• Bella Vista: $145,311, up 25.7%
• Siloam Springs: $266,401, up 7.3%
• Lowell: $231,534, down 29.3%

Consumer confidence plays a large roll in sales tax revenue as does disposable income. The Conference Board reported that consumer confidence in July rose to its highest level in nearly seven years. July is the month that corresponds with the September sales tax revenue.

"Strong job growth helped boost consumers' assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations," Lynn Franco, the board's director of economic indicators noted in July. "Recent improvements in consumer confidence, in particular expectations, suggest the recent strengthening in growth is likely to continue into the second half of this year."