Online sales continue hitting cities' bottom line

Staff Writer

A U.S. Supreme Court ruling overturning a previous 30-year-old decision couldn't come soon enough for some Mississippi leaders after another month of retail sales tax revenues continued to demonstrate the growing negative impact online sales are having on city revenues.

Taxes collected on December retail sales, traditionally the biggest month for cities across the state, were down in 54 of 94 towns across North Mississippi compared to the previous year, according to new state numbers. In the Golden Triangle, Starkville, West Point and Columbus -- three of the 10 largest retail centers in North Mississippi -- saw declines, as did Louisville.

Most other large towns in the region, including Tupelo, Pontotoc, Corinth, New Albany, Oxford and Amory, saw slight increases of 2 percent or less.

"I think lots of factors go into retail sales, changing shopping patterns, store openings and closings, lots of things. But I don't think there is any doubt online sales are making a big difference, especially when look across the state. If you look back over the last five years, you can track the growth of online sales and at the same time, the broad decline in several retail sectors. Nowhere is that more evident than at Christmas," said Republican State Sen. Chuck Younger, whose district covers parts of Lowndes and Monroe counties.

The losses hit cities the hardest because they depend on sales tax revenues for between 40 and 50 percent of their operating revenues. When those revenues don't grow, even at a modest rate, it puts pressure on other revenue sources or services.

The state returns 18.5 percent of sales taxes collected within municipal borders to the cities. Because of delays in collecting and reporting, taxes on December retail sales are returned to the cities in February.

The state Legislature is trying to find ways to offset some of  those losses to cities by reallocating revenues from other sources or increasing the percentage returned to the cities. But no option has attracted widespread support.

"I don't know what we are going to do," Younger stated. 

The state can force businesses that have an actual outlet in the state to collect sales taxes on online sales and those revenues have climbed to more than $300 million a year. But hundreds of millions of more dollars are lost because the businesses don't have a physical presence in the state. In addition, the online sales tax revenues aren't sent back to the cities where the buyers' live.

The Supreme Court is considering two cases that could give states the authority to impose sales taxes on all online purchases. Then it would be to the states to figure out how to allocate those revenues.

"Obviously that would be the best thing for states, and in turn, the cities. But who knows when it might happen," Younger said.

In Columbus, revenues fell 2.6 percent compared to the previous year, from $978,751 to $953,452. In Starkville, collections were down 1.2 percent from $661,605 to $653,482.

Since last July, Columbus' revenues are actually down slightly from the previous year. Tupelo's numbers are down as well. Starkville's are up a minuscule .37 percent during that period.
West Point, which is making an $18,500 monthly repayment from an overpayment to the state, was down from $204,650 to $185,231.

Among smaller towns in the Golden Triangle area, Caledonia and Artesia in Lowndes County were up while Crawford was down. Macon and Shuqualak were down in Noxubee County while Sturgis was up in Oktibbeha County

Ackerman and Weir both were up in Choctaw County while Eupora, Mathiston and Mantee all were down in Webster County.

Houston was down in Chickasaw and Aberdeen dropped in Monroe.