Local sales tax declining
Local governments are feeling the same financial pinch as the citizens they represent, but are hopeful things will turn around soon, officials said this week.
Both the City of Bainbridge and the Decatur County governments report sales tax collections have dropped this year and other sources of revenue have declined, as well. So for now, the reality of bringing less money in means local government leaders are being cautious in the spending they undertake to maintain services.
The primary source of revenue for local governments comes from sales tax.
Of the 7 percent sales tax in Decatur County, 3 percent goes to local governments: 1 percent for Local Option Sales Tax (LOST), 1 percent for Special Purpose Local Option Sales Tax (SPLOST) and 1 percent for Education Local Option Sales Tax (E-LOST). LOST is directly remitted to local governments based on their population, while SPLOST (collected in a lump sum by the county) is split up according to a formula agreed upon by its recipients.
In some ways, local governments have only recently began to feel the impact of the economic downturn affecting the United States.
“It takes about six months to a year before governments feel the impact of a slowdown,” County Finance Director Carl Rowland said. “Businesses pay the taxes, which are collected later by the state and sent back to us.”
Total countywide SPLOST tax collections for 2008 totaled $5,100,460, down 2.11 percent from 2007’s total collections of $5,210,408, according to figures provided by Rowland. However, looking at collections between July and December for both years, the decline is more significant. SPLOST generated $2,613,437 in the last half of 2008, about 8 percent less than the $2,840,454 SPLOST total from 2007.
According to the City of Bainbridge’s LOST collection between this October to December, totaling $525,470, was down 8 percent from the same period last year, when $569,752 was collected. Collections were actually up by 3 percent between January to December 2008 when compared with 2007.
Less money means having to ‘watch and wait’
The decline means Bainbridge, Decatur County and local school officials—as well as their counterparts in Attapulgus, Climax and Brinson—have to keep a closer watch on their wallets, as sales tax helps pay for everything from road work equipment, school buses and construction financing.
In fact, LOST collections account for about 24 percent of the City of Bainbridge’s current general fund budget, $9,537,047, according to City Manager Chris Hobby.
Officials are watching and waiting to see how much longer the recession will last. The general consensus between Hobby, Mayor Mark Harrell and Rowland is another six months of hard economic times before revenue starts going back up.
The City of Bainbridge has put a few planned major equipment purchases on hold for now and Decatur County is only considering purchases deemed absolutely necessary for its work. Both governments hope lower gas prices will help them save money in 2009.
“Decatur County is in a unique situation,” Rowland said. “The unemployment rate is at an all-time high. We have to hope for a better overall national economy in 2009.”
It’s not just less consumer spending that is tightening governments’ wallets: other revenue sources, such as traffic tickets and building permits have declined, Hobby said.
The same has held true for Decatur County, which has seen effects of reduced income after American Fibers and Yarns closed its plant in the Industrial Air Park.
SPLOST V, approved by local voters in November, will continue from the current SPLOST when it expires in March.
The City of Bainbridge plans to make good use of SPLOST money between now and October 2009.
About $4.1 million will be spent on the second phase of the city’s plan to complete its sewer master plan by 2012. About $3.3 million will be spent on other uses, including $1 million for recreation improvements at Cheney Griffin Park and elsewhere, and $1,029,000 for Public Safety equipment and building improvements, including a new ladder fire truck.
Decatur County is using SPLOST money to repay multi-million-dollar low-interest loans it took out to help purchase the land, which makes up the Silver Lake Wildlife Management Area. One of the major projects the county hopes to use SPLOST money for is a telecommunications infrastructure upgrade that would benefit emergency responders and other agencies and offices that use radios to talk to each other.