Sales tax revenue flat in May report, but four Northwest Arkansas cities up year-to-date

by Kim Souza ([email protected]) 161 views 

Consumer spending has been unpredictable during the first few months of the year as sales tax revenue in Northwest Arkansas’ four largest cities has fluctuated monthly, ranging from a record February to the weakest May in four years.

Fayetteville, Springdale, Rogers and Bentonville reported combined sales tax revenue of $5.19 million in May, flat against a year ago, but down 16.88% from the prior month. Each city collects a 2% tax on the sale of goods and services. Half of that tax goes toward debt pay down and the other 1% funnels into the city budget. This report represents the latter.

In 2016 the combined sales tax collections have been up and down as follows:
January: up 3.4%
February: up 13.15%
March: down 2.11%
April: up 16.88%
May: down 0.02%

City leaders said have come to expect the ebb and flow of sales tax revenue but say 2016 is a little more erratic than in recent years. For instance last year cumulative sales tax revenue was up consistently for each of the five months.

The May revenue correlates with March spending and according to Gallup the March personal spending averaged $89 which included restaurants, gas stations, stores or online – not counting home and vehicle purchases, or normal monthly bills. It was the highest monthly spending for the month of March since Gallup began tracking data nine years ago. While that was the case nationally, that spending did not match the local spending habits reported by the four cities in the is report.

Consumers continue to spend more on large purchases like cars and other durable goods, but they remain frugal at retail looking for the best deals they can find regardless of whether they are sold online or in brick and mortar stores, according to Jack Kleinhenz, chief economist for the National Retail Federation.

Consumers are a finicky lot, he said. Kleinhenz said overall consumer spending was healthy in March, but consumers are spending less on apparel while they spent more on household furnishings. He said the April retail sales gain of 3.5% shows an expectation that consumers are in firm control of the economic momentum. He said the shift in spending habits reflect new economic and changing market realities given than online sales rose 8.6% unadjusted year-over year.

Rogers reported the largest sales tax growth in May among its peer cities. At $1.54 million, sales tax revenue grew 9.96% from a year ago. May was also the city’s second best month for revenue so far this year, behind the February revenue of $1.671 million. Through the first five months of 2015, sales tax revenue for Rogers totals $7.07 million, up 7.76% over a year ago.

City officials have budgeted $15.264 million in sale tax revenue for the year and through five months are slightly ahead of budget.

In Bentonville sales tax collections have been swinging back and forth every month of this year. January revenue was down 14.63%, February was up 46.72%, March was down 9.71%, April up 17.9%, and May was down 14.31%.

The city reported May revenue of $932,544, which was its third highest collection amount so far this year. The city has budgeted $9.8 million for the year and despite the erratic monthly reports is running above budget through the first five months of the year with total revenue of $4.654 million. Year-to-date sale tax revenue in Bentonville is up 4.06% from a year ago.

In Springdale, sales tax revenue was flat in May, after a 22.64% gain in April. City officials are pleased with the overall sales tax collected this year which totals $5.319 million, a gain of 7.71%. The sales tax growth is attributed to more retail and restaurant patronage in the city. Sales that may have gone to Fayetteville or Rogers are now staying in Springdale. The May revenue was also the highest level the city has ever seen for that month. Springdale also reports the largest percentage of overall sale tax growth among its peer cities so far this year.

Fayetteville sales tax collections also tapered off in May totaling $1.66 million, nearly flat against the $1.647 million reported a year ago. Mayor Lioneld Jordan said recently he’s excited about the sales tax growth reported over the past 18 month as more businesses located to the city. That said, the Whole Foods opening at the beginning of March did not hoist sales tax revenue for May as expected, though the store is busy around the clock. Economists say sales at by Whole Foods are likely coming from other grocers and restaurants negating the overall gains.

SALES TAX REVENUE (January through May)
2016: $4.654 million
2015: $4.472 million

2016: $8.464 million
2015: $8.022 million

2016: $7.070 million
2015: $6.566 million

2016: $5.319 million
2015: $4.938 million