City sales tax revenue still down
Published 5:02 pm Friday, May 8, 2015
Just over halfway through the fiscal year, Bainbridge City Manager presented a financial update at Tuesday’s Bainbridge City Council meeting.
Overall, Hobby said, everything looks good. The city is at 48 percent of its expenditures and 51 percent of revenue at halfway through the year.
An ongoing problem for the city’s financials, however, is on the revenue side, Hobby said.
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The city is down in sales tax revenue, compared to where it was last year.
Up until the Great Recession in 2008, Bainbridge saw a steady increase of between three and four percent in its sales tax revenue every year. The Recession made a noticeable impact when revenue dropped eight percent in 2009.
Those numbers started to make a rebound in 2011, and Hobby said it looked like the city would recover.
“In 2013, [sales tax revenue] didn’t drop. It plummeted 12 percent,” Hobby said. “What happened in 2013 that caused that steep drop? Three things happened: energy tax exemption, change to car tags, expanded [Georgia Agricultural Tax Exemption] program. We had begun the process to recover to our four percent growth, and then it went away.”
Hobby said that over the years, the city has done well to maintain and cut expenditures to offset the diminishing revenue.
“We’ve put off buying stuff we needed to buy,” Hobby said. “Our problem has always been on the revenue side, and the audit report showed that two weeks ago.”
Hobby gave the council the figures of where the city would be had the regular four percent growths never stopped.
“We would be expecting this year to collect around $2.753 million in sales tax, but instead, we’re going to collect $1.67 million,” Hobby said. “It’s about $1.1 million in lost revenue.”
Councilwoman Glennie Bench asked what, if anything, organizations like the Georgia Municipal Association, a nonprofit that supports legislative interests of Georgia municipalities, were doing to address the “rampant fraud” of the GATE Program.
Hobby said that legislatures think the sales tax declines are steadying off, and that he expects GMA to address the fraud issue.
Hobby said that the program as a whole is not under attack, but that the fraud within it is apparent.
“The legitimate uses of the GATE card is fine. Nobody has an issue with that,” Hobby said. “The fraudulent uses of that is where the problem is.”