SILOAM SPRINGS — Three of Northwest Arkansas’ four largest cities saw drops in August sales tax collections over the same month last year, according to figures released Wednesday.

Collections from the state treasurer’s office show Fayetteville experienced the largest drop, with August collections falling 8.68 percent below August 2008. Bentonville saw an increase of 13.83 percent and Springdale and Rogers saw drops of 7.34 percent and 5.58 percent, respectively.

Each of the four cities collects 2 percent in local sales taxes, with 1 percent going to the general city budget and the other 1 percent approved by voters for specific capital projects.

After months of consecutive revenue drops from dwindling taxes and building permits throughout 2009, all of the cities are exploring options such as cutting 2010 budgets, hiring freezes, additional taxes and spending capital reserves to compensate for potential shortfalls.

“We’re hoping that the economic situation improves,” Fayetteville finance director Paul Becker said. “But we’ll continue to look very carefully as the actual numbers come in.”

Fayetteville collected about $1.33 million in August for the 1 percent that voters approved, compared with $1.46 million the same month the previous year.

The city’s proposed 2010 budget includes taking $1.2 million from the city’s $8 million reserves and an additional $1 million of budget cuts. The cuts include keeping some vehicles due for replacement for another year, cutting salaries for planning commissioners, and freezing open positions in police, fire and city planning departments.

“We’ve cut as much as we could from operations,” Becker said. “The only other ways to address it are to use reserves or increase millage, which is an unfavorable idea considering theeconomic situation we’re faced with in this country.”

The city last used budget reserves in 2005, when officials pulled $2.1 million.

Springdale’s collections dropped to $838,157, down from $904,568 a year ago. The city has experienced consistent declines punctuated by a few months of slight gain over the past two years.

In August, the Springdale City Council approved a 5 percent mixed drink tax, which officials hope will generate about $250,000 per year.

The tax is part of Mayor Doug Sprouse’s aim to adjust the budget by $2 million. Besides passing the tax, the city has moved its bomb squad to Bentonville and implemented pay freezes.

Sales tax collections in Rogers dropped from $1 million in 2008, to $946,637 in August.

The city will reduce employee salary increases to a 2 percent cost-of-living adjustment.

Mayor Steve Womack has said the city’s revenue is more consistent thanothers because it has a relatively stable retail base.

Figures released Wednesday represent a 1 percent tax collected in August and distributed in October after refunds were provided to businesses exempt from the state’s streamlined sales tax policy.

The streamlined tax policy, put into place Jan.1, 2008, removed a cap that limited local taxes to the first $2,500 of an item’s price, providing exemptions for vehicles and business purchases.

Businesses that previously avoided the taxes now pay them and seek refunds up to six months after, often collecting several months of refunds at once, creating sometimes inconsistent collections.Bentonville Finance Director Denise Land has attributed the city’s fluctuating collections to large refunds provided through the policy.

Bentonville collected about $525,425 in August, up from $461,597 a year ago. Bentonville will base its 2010 sales tax projections on 2007 collections, before the policy was in place.

News, Pages 2 on 11/04/2009

Comments

To report abuse or misuse of this area please hit the "Suggest Removal" link in the comment to alert our online managers.

Use the comment form below to begin a discussion about this content.