The financial strength of consumers, availability of the COVID-19 vaccine and rising wages have helped Northwest Arkansas’ four largest cities surpass their 2020 sales tax revenue.
In their November reports, Bentonville, Fayetteville, Rogers and Springdale reported cumulative sales tax revenue of $83.27 million. That is up 17% over the same period last year, with still one month of reporting to go for their fiscal 2021 budgets.
The November report is compiled from sales tax collections in September. The cities each collect local sales tax on top of the state tax, and this report reflects 1% of their local tax collections that go into city budgets. That creates a two-month lag in the data.
The November monthly report was strong across the board for all the cities, with three of the four reporting double-digit growth from the same month last year. Bentonville led the pack with a 16.92% increase in its revenue reported this month. The city showed $1.74 million for the month, up from $1.49 million in the same period last year.
Bentonville continues to benefit from more consumers returning to their offices after working remotely for most of the past 20 months. Restaurant operators in the city said they see larger lunch crowds which they attribute to more traffic in the city from commuting workers. The town also benefits from more consumers ordering online as that sales tax goes to the city where the customer is domiciled.
Through this year’s first 11 months’ reports, Bentonville has posted sales tax revenue totaling $19.38 million, up 29% from the $15.01 million in the same time last year. The city’s sales tax revenue is already 18.62% more than the entire year of 2020, which amounts to $3.04 million more in the city coffers than was budgeted for the whole year.
Rogers reported 13.24% gains in its November sales tax revenue. That totaled $2.08 million, and it marked the fourth straight month of more than $2 million in revenue. The November report was also 17.14% more than the same month in 2019, before the pandemic.
When the city budgeted for this year, Mayor Greg Hines said that there were still plenty of unknowns about COVID-19 and how the vaccines would work. Given that the vaccines were not yet available. He said the city kept its budget flat to 2020 with sales tax targets of $19.9 million. The city came close to budget in its October report, and it surpassed budget in November with still one month to go in 2021. The stellar results also take into account more than $960,109 in rebates deducted through October. City officials said they expect rebates to surpass the $1.33 million reported for the entire year of 2020.
Through the November report, Rogers had added $21.64 million in sales tax revenue, which is 14.95% or $2.81 million more than reported in the same period of 2020. Sales tax revenue is also up 5.2%, or $1.06 million more than reported in the full year of 2020.
The November report also showed Fayetteville had strong 13.78% growth in sales tax revenue from the same period last year. Fayetteville’s sales tax revenue totaled $2.42 million for the month. The city has benefited from the University of Arkansas having students back on campus. The Razorbacks’ winning football season also bodes well for the city with higher game attendance and more out-of-town weekend traffic. The Walton Arts Center in downtown Fayetteville has also had a fun slate of shows and events this fall which helps city revenue.
Fayetteville also budgeted conservatively for this year, given the wildcards of COVID-19 and its variants and the winding down of stimulus. The city is in sound fiscal shape, with sales tax revenue totaling $24.72 million for the 11 months reported in 2021.
That is $1.08 million more or 4.56% over the entire year of 2020. For the like periods of 2020 and 2021, sales tax revenue is up 14.65%, with $3.15 million more added to the coffers this year.
Springdale is also having a solid year, with the sales tax reported in November totaling $1.65 million, up 6.29% from a year ago. Springdale Mayor Doug Sprouse has said the city’s budget is sound, with sales tax revenue up 2.47% over the entire year of 2020. Like Bentonville, Springdale has benefited from its large population ordering more online in the past couple of years, given the city does not have the retail shopping presence of cities to the north and south.
Sprouse is pleased with the 11.5% sales tax growth year-over-year, as reported from November 2020. The city has added $1.81 million to its coffers this year from additional sales tax revenue. The city expects to see solid gains in the December report, which will reflect purchases made in October.
Consumer spending has been strongly spurred by rebounding confidence levels in October, according to the Conference Board.
Lynn Franco, an economist and senior director for The Conference Board, recently said consumer confidence reversed a three-month downward trend as concerns about the spread of the Delta variant eased.
“While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted. The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October – a sign that consumer spending will continue to support economic growth through the final months of 2021. Likewise, nearly half of respondents (47.6%) said they intend to take a vacation within the next six months – the highest level since February 2020, a reflection of the ongoing resurgence in consumers’ willingness to travel and spend on in-person services,” Franco said.
Economists at Wells Fargo Securities noted in a Nov. 19 briefing that consumer spending looks strong out to the end of the year, but they expect higher prices to eat into consumption gains.
The economists said rising inflation bears close watching because September was the first month that consumers tapped into their savings in many months. In October, inflation hit a 30-year high, pushing consumer sentiment back down in November.