Tax revenues down for the city, region

Staff Writer

A down month hit northeast Mississippi retailers in September with tax revenues on retail sales falling compared to last year in more than 60 percent of towns across the region.

The previous month, revenues were up in a majority of cities with overall revenues increasing slightly, according to a review by the Daily Times Leader.

One of the puzzling retail stories remains why revenues in West Point continue to be down against the prior year despite strong retail growth along the Highway 45 Alternate corridor.

The answer lies in several places, city leaders say.
This month, West Point received $165,662 as its share of taxes collected on September retail sales. That was down from $198,736 the same month last year and a peak of $203,118 in 2015.

Sales tax revenues run two months behind, meaning taxes collected on September consumer purchases are sent to the state in October and 18.5 percent then returned to the municipality where the purchases were made in November.

This year, revenues are down 15 percent overall compared to last year.

In fact, they've been down against the previous year for much of the last two years.

One reason is an audit by the state Department of Revenue discovered in March 2016 the city had been overpaid for a long period of time. The state withheld the city's entire sales tax revenue share in March 2016 and has held out $18,398 every month since then as part of a repayment plan, according to West Point City Accountant Mary Shannon.

That plan will continue until June 2019, meaning the city will have repaid about $1 million.

Unfortunately, the state won't share how the overpayment occurred, whether it was one business or more than one, or any other details that might help the city.

"It's hard to make heads or tails of it," Shannon said. But even with that, Shannon and others say sales tax revenues still are below where they should be.

"We've been looking at the numbers and overall, even with the repayment, our numbers aren't where we think they should be when should look at everything," Shannon said.

"It's hard to pinpoint a why," added Lisa Klutts, director of Community Development for the West Point Clay County Growth Alliance.

"We've asked the state for some guidance or information to make sure in these audits we aren't missing something or being short-changed. They aren't really that helpful," Shannon said.

One major impact may be the completion of the $300 million Yokohama manufacturing plant, which began producing tires in October 2015. Two years of construction meant hundreds of workers in and around the community, not to mention the ripple effect of construction related supplies. A look at industry categories during the prime 18 months of construction shows an increase in sales tax revenues from food and lodging, retail trade and wholesale trade.

Those numbers have retreated in the two years since construction ended.

In addition to Yokohama, a smaller dynamic may be a changing grocery landscape. Kroger closed its store in the Plaza shopping center at the intersection of 45 Alternate and Main Street. That left a Sunflower and Wal Mart serving the city until a Save-a-Lot eventually took Kroger's location.

While Kroger was closing its West Point store, it was completing expansions at stores in Columbus and Starkville. Those stores siphoned off some Clay County business.

Gauging the retail climate isn't the only reason the numbers are important. Sales tax revenues make up a big part of city budgets -- 40 to 50 percent -- paying for everything from public works to police and fire protection.

West Point is no exception.

"Between paying back the overpayment and the other declines, we've taken a big hit to our budget. It's significant," Shannon lamented.

The Board of Selectmen raised the city's millage for its bond fund this year but left the property tax rate for general operations unchanged. As sales taxes continue below expectations, that puts a pinch on city revenues and operations.

"In hindsight, we probably should have raised the millage more than we did," she said.

Across northeast Mississippi, sales tax revenues were down in 57 of 94 towns from the same month last year.

That was a significant change from last year when the region was about evenly divided between cities that gained and those that lost.

And Oxford continues to gain ground on replacing Columbus as the second largest retail center in the region. Tupelo is by far the largest.

Columbus received $823,084 in sales tax revenues this month, down from $827,364 in the same month last year. Because sales tax revenues run two months behind, revenues received by cities in November reflect September consumer purchases on everything from cars to candy.

It marked the second consecutive month Columbus has seen a slight decline compared to last year.

In other Lowndes County cities, Caledonia revenues increased from $14,907 last year to $16,061 this year, Crawford’s fell from $2,002 to $1,532, and Artesia’s fell from $916 to $600.

In Starkville, revenues rose to $608,136 from $585,701 a year ago. Starkville was one of only three large retail centers – New Albany and Amory were the other two in the top 11 – to see an increase over last year.

Also in Oktibbeha County, revenues in Sturguis fell from $37,38 last year to $3,090.

In Noxubee County, Macon saw revenues drop from $53,726 to $47,028 and Shuqualak’s revenues went from $2,752 last year to $2,306 this year.

Revenues in Aberdeen fell to $66,916 from $68,780. In Chickasaw County, Houston's revenues fell to $88,243 from $95,175 last year, Okolona's edged upwards to $23,535 from $23,188 last year, and Houlka's dipped from $8,683 in November 2016 to $8,503 this month.

For the second straight month, Columbus lagged slightly behind Oxford for second place in the region’s retail market. Oxford received $828,026 this month, down from $894,082 in the same month last year.

During the early fall months, Oxford often overtakes Columbus as Ole Miss students return to campus. Columbus often takes back over the rest of the year, but the gap has steadily been closing.