Retail spending amid the highest consumer confidence rates in 18 years helped hoist local sales tax revenue in June to double-digit gains. Bentonville, Fayetteville, Rogers and Springdale reported cumulative revenue totaling $5.686 million, up 10.66% from a year ago.
June tax revenue represents retail sales and services rendered in April. Each city collects a 2% local sales tax and half is used to pay down debt, while the other 1% goes into city’s general operating fund. This report reflects the latter 1%. Looking back at April sentiment, consumers were spending big after a weak start to the year.
Retail sales increased 0.3% in April, according to U.S. Commerce Department. Spending increases were spread across most retail categories, with especially big gains at furniture and clothing stores. Economists said the strong job market and tax cuts gave households a little more money to spend, although gasoline prices have been rising this year amid higher oil prices.
AAA reported in April national prices at the pump rose to $2.76. While the lowest price for gas in April was $2.26, AAA said 13% of gas stations had already raised prices above $3 per gallon. Mervin Jebaraj, director of the Center for Business & Economic Research at the University of Arkansas, said if fuel prices jump 50 cents a gallon, that negates the tax savings most families are getting.
That said, spending at retail has been stronger since March as consumers began coming out of hibernation. Michael Pearce, U.S. economist at Capital Economics, said consumption growth is on track for a big rebound this quarter, which could push overall GDP up to more than 3%, an improvement over the 2.3% annual rate record in the first quarter.
Retail sales are closely watched by economists because they provide an early read on consumer spending, the principal driver of the U.S. economy. Store purchases account for about one-third of U.S. consumer spending. Spending on services like mobile phones plans or at nail and hair salons make up the remaining two-thirds of the financial metric.
Local sales tax reports are in sync with more consumer spending trends. Bentonville continues to lead the region in sales tax growth this year. In June, sales tax revenue rose 19.67% to $1.007 million, the biggest June on record for the city. Through the first six months of the year, Bentonville reports revenue totaling $9.907 million, up 69.6% from the same period last year.
Building across Bentonville continues with new eateries like Jersey Mike’s Subs and Raising Cane’s Chicken Fingers expected to open soon. Aldi is expected to build in Bentonville, giving that grocery retailer its fifth location in the region. More recently, a new hotel venture was announced for downtown Bentonville next year.
Rogers also saw a 10.5% bump in sales tax revenue this month. The city reports June revenue of $1.592 million, the best June on record. Sales tax revenue growth has been sluggish this year in Rogers, but city leaders are glad to see strong May and June results and expect the summer to be stable as well. Through the first six months of the year, Rogers reported revenue totaling $9.437 million, up 2.5% year-over-year. While it’s a good bit less than in neighboring Bentonville, city officials said the growth is within budget projections.
Springdale also continues to see steady growth this year its revenue. In June, the city reported total sales tax revenue of $1.334 million, up 18.40% from a year ago. It was also the city’s best month for sales tax revenue this year, edging out the $1.3 million collected in February.
Through six months of 2018 Springdale reports total sales tax revenue of $7.246 million, up 4.81% year-over-year. The city has had two months this year with negative growth from the prior year, but the momentum has been building since April and city officials expect revenue growth to remain steady in the mid-single-digit range for the balance of the year.
Fayetteville, the largest city in the region, has one of the slowest growth patterns this year. In June, Fayetteville reported sales tax revenue of $1.752 million, up 1.35% from a year ago. It was the only city in the region not to hit double-digit growth this month.
While growth has been slower, Fayetteville has had positive gains each of the past six months, despite April results being up only 0.9%. Year-to-date, Fayetteville reports sales tax revenue of $10.945 million, up 3.98% from the same period last year. Mayor Lioneld Jordan said the city is running slightly ahead of the budgeted growth projections of 2% this year.