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A mixed picture for city sales tax collections

Posted by haroldkitching on February 14, 2013 at 1:50 AM

At first glance, it seems good news that Casa Grande’s income from its retail sales tax has increased by 12 percent from five years ago.

The bad news is that income from construction sales tax has plummeted by 79 percent during the same time, a victim of the housing, construction and financial bust.

You’ll find all of the figures for construction, retails sales and other sales taxing categories on pages 110 and 111 of the 168-page Comprehensive Annual Financial Report for the fiscal year that ended last June 30. The two pages are also reproduced in the Gallery section of this website.

The report was outlined to the City Council during its Feb. 4 meeting and is available in full on the city’s website at http://www.casagrandeaz.gov/web/guest/cafr

Looking at statistics on the two pages shows that for fiscal year 2007, just before the economic downturn began settling in, the city raised $24,832,684 in sales tax. That was led by $8,778,705 from retail trade and $8,405,855 from construction sales tax (with a base of 4 percent as opposed to 2 percent for retail).

That year, retail tax made up 35.35 percent of the total, with construction tax at 33.85 percent. By 2012, construction tax brought in only $1,802,508, just 9.41 percent of the total $19,163,329. Retail trade was $9,836,562, or 51.33 percent. That retail trade amount was up just slightly from the $19,046,744 for fiscal year 2011.

For a city heavily dependent upon sales taxes (at 37 percent of its revenue), the loss of the construction taxes forces even more reliance on the retail trade tax income.

To rub some salt into the wound, it was pointed out that when the city builds projects it also pays construction sales tax.

“So over the past couple of years, many of our projects helped support us from going even further in the hole,” City Manager Jim Thompson told the council.

The picture today is not yet clear.

Thompson said sales tax, mostly in retail, is running about 4 percent behind for the 2013 fiscal year that began July 1, but the impact of Christmas shopping is not yet known because the state, which collects all of the taxes, doesn’t issue reports until two months after collections.

“We’ll see,” he said. “The mall was crowded, other stores in town were crowded, it seemed to be a lot going on in the community, so hopefully those numbers are good. We just don’t know at this point in time.

“Next month’s state report will give us a really good indicator of how the Christmas shopping was, and that’s usually our best time of the year in Casa Grande.”

Mayor Bob Jackson said that running behind about 4 percent is sales tax collection is “kind of counter to what you read going on statewide; that really surprises me a little bit.”

Thompson said that in years when there is a presidential election, the sales tax income from winter visitors drops, “because with the winter visitors or other movements that occur, people either don’t travel or travel more. And with the economy the way it was, some people weren’t traveling as much or shopping as much for Christmas.”



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