County sales tax revenue down

Wednesday, July 2, 2008 | 9:12 p.m. CDT; updated 4:08 p.m. CDT, Friday, August 1, 2008

COLUMBIA — Taxable sales in Boone County were down from the previous year for the first time in 2007, and projections for 2008 aren’t much better. That means a tight year in 2009 for the county budget, which relies heavily on sales tax revenue.

The grim financial picture was the theme of a preliminary budget presentation that Boone County Auditor June Pitchford offered county commissioners Wednesday.

“This is the first time in Boone County we’ve encountered this type of sudden downward fall,” Pitchford said. “We’ve seen dips in the past, but never something this substantial.”

The figures Pitchford presented showed that taxable sales in Boone County for 2007, which totaled about $2.2 billion, were down about $6.6 million from 2006. The biggest declines came in the building material and wholesale trade categories, but sales were also down in the miscellaneous retail, food store, and furniture and equipment categories.

Sales tax is a volatile source of revenue, and it can take months or years to pinpoint trends. Pitchford said that, looking back, it’s clear the trend toward slower sales and sales tax revenue began in 2006 but didn’t become readily apparent until 2007.

Boone County isn’t alone in its struggle with sales tax revenue. Columbia officials have also seen the slowdown and are trying to develop budget strategies to deal with it.

On the flip side, property tax revenue, which makes up about 10 percent of the annual county budget, is expected to rise slightly.

Pitchford said the county in 2007 had budgeted for 4 percent growth in sales tax revenue. Midyear calculations, however, showed sales taxes falling far short of that projection, and the budget was adjusted accordingly. By the end of 2007, taxable sales had fallen by 0.3 percent.

For the current budget year, the county budgeted for a 0.5 percent increase in sales. Collections from January through May, however, showed only 0.25 percent growth. By comparison, until 2007 the county had seen sales tax growth ranging from a low of 2.5 percent to a high of 7.7 percent during the past 10 years.

Pitchford told commissioners that it is too early to tell whether stimulus checks from the federal government might cause taxable sales to jump a bit.

It all adds up to a tight budget for 2009, Pitchford said. Commissioners might have to examine cuts through changes in building services and nondepartmental budgets. Pitchford warned that there might be no money available for raises or for hiring new employees.

Presiding Commissioner Ken Pearson said high gasoline prices might have played a role in the slowdown.

“At $4 a gallon, there’s $2 difference from last year that would be spent otherwise,” he said. “People aren’t going out to eat because they’re buying gas, and that’s a tax we’re not getting the full benefit of.”

Pitchford’s presentation kicked off a budget process that will continue through the summer and fall. Departmental budget requests are due to the commission for reviewby August, and work sessions will begin in September. The final 2009 budget will be determined in December.

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