NWA sales tax revenue rose 10% in February; impact of coronavirus looms

The four largest cities across Northwest Arkansas saw a strong increase in sales tax revenue generated from February sales and services. Bentonville, Fayetteville, Rogers and Springdale cumulatively reported total revenue of $5.75 million, up 10.17% from the year-ago period.

The April report consists of revenue generated in February from a 1% local sales each city collects to help fund their annual budgets. Sales conducted in February are remitted by the cities to the state in March and then reported in April as revenue.

City leaders expect the April report will be the peak for several months to come as non-essential businesses were ordered to close in mid-March and thousands of consumers in Benton and Washington counties are working from home or furloughed altogether because of the coronavirus.

Bentonville reported revenue of $1.12 million, up 6.87% from the year-ago period. It was the highest April revenue report on record for the city and reversed the 9.07% drop in revenue reported the prior month.

Bentonville lost out on revenue from its annual Run Bentonville half marathon event which was slated for April 4 and had to be conducted virtually. The city also has seen several sit-down restaurants closed and others operate with limited hours and take-out service.

With Walmart’s corporate employees being told to work from home that greatly reduced the number of people coming to Bentonville daily. Hotels that typically host vendors meeting with Walmart buyers during the week are empty and the city’s largest tourist attractions of Crystal Bridges Museum of American Art, The Momentary and Walmart Museum all closed as well.

City officials expect sales tax revenue to decline sharply in the next two months to reflect the sluggish economy economist are calling a recession, but the depth of the coronavirus crater is still being debated.

Springdale Mayor Doug Sprouse said he expects the downturn in sales taxes to hit next month. How far they will slide is unknown.

Springdale led the region in sales tax growth in the April report with February sales totaling $1.29 million, up 13.41%. Sprouse was pleased with that report but said the city is bracing for and planning to mitigate the impacts of lower revenue in the next two to three months.

“We are in good shape going into this downturn as our revenue has been up nicely this year and our expenses have been below budget. We are seeing some downward pressure on expenses as we navigate through this situation,” Sprouse said.

Travel, training costs, fuel costs, virtual meetings and lack of lights and other services at public ball fields and other closed venues closed should all be an offset to the lower sales tax Sprouse expects next month.

“We know we are going to take a hit and our best read after talking with economists is that Springdale tax base is made up of more industries deemed essential and stable during challenging economic times. We are a good position to weather this crisis,” he added.

Sprouse said the city has put contingency plans in place with triggers for the city council to act upon should this crisis worsen. He does not think Springdale will need to dip into reserves and will still be able to provide uninterrupted services to residents and preservice its workforce.

“We are watching things closely and are prepared to react should the downturn last more than three months. We will stay ready to move forward once we get the green light,” he said.

In Fayetteville, the February sales tax revenue totaled $1.78 million, up 10.79% marking the largest percentage increase thus far in 2020 and the best April report on record. Fayetteville has been hit hard as University of Arkansas students were sent home to learn virtually and all sporting events were canceled.

The city also lost future revenue when the annual Joe Martin Stage Race slated for March 15 was postponed. Dozens of other events were canceled amid COVID-19 fears.

Fayetteville Mayor Lioneld Jordan said the situation continues to change rapidly. He said restaurants and bars have been very responsive to the restrictive operational guidelines to adhere to social distancing. He said the city’s operating budget was sound as of mid-March. The board did allocate $3 million from its emergency fund in March but said at the time, there were no set plans for the proceeds.

Jordan said the situation is fluid and some of the money allocated from the emergency fund would be used for personal protective equipment (PPE). Should the shutdown and COVID-19 threat, persist some of the funds would likely be used for staffing.

Rogers reported February sales revenue of $1.55 million, up 9.28%. The report in April adds to the city’s solid start in 2020 over the prior year. Rogers budgeted for monthly revenue of $1.65 million each month, and through four monthly reports in 2020, revenue is $7.03 million, roughly $399,000 ahead of budgeted projections.

Rogers is a city of retail, much of which has been shuttered for the past month. The much-anticipated March opening of Topgolf was postponed as was the opening of Saltgrass Steakhouse. Pinnacle Hills Promenade is closed as is the surrounding retail with the exception of restaurants for takeout, Target, Fresh Market and a Walmart Neighborhood Market store in the vicinity.

Rogers Mayor Greg Hines said the city is paying close attention to the 2020 budget and reserves. He is confident sales tax revenue will be down in the coming months but said the city is well prepared to make up the difference. In a press conference on March 25, Hines said Rogers has the financial wherewithal to survive the storm.

“If there is in any way a need for additional funds as it relates to the next 60, 90, 120 [days] throughout the rest of the year, we have the funds to do that and we will do a clean-up ordinance at the end of the year,” Hines said during the press conference.

City leaders across the region continue to express their graduate to Gov. Asa Hutchinson who gave each county and city flexibility in how they handled the shutdown. The governor has set a tentative date of May 4 to begin lifting some restrictions that have been in place since COVID-19 began spreading through the state in March.