MuskogeePhoenix.com, Muskogee, OK

September 29, 2013

Sales tax revenues in 7-month slide

City officials search for cause of decline

By D.E. Smoot
Phoenix Staff Writer

— Muskogee’s sales tax revenue fell for the seventh consecutive month in September compared with year-ago figures, sparking a quest for answers that might explain the downward slide.

Data compiled by the Oklahoma Tax Commission show it disbursed just more than $1.92 million to the city this month. That is down $95,958, or 4.76 percent, from the nearly $2.02 million disbursed for the same period a year ago.

The September disbursement was based upon actual sales reported July 16-31 and estimated sales for the first two weeks of August. Disbursements were up 1 percent statewide, with more than $133.78 million returned to 511 municipalities this reporting period compared with nearly $132.45 million disbursed to 509 municipalities for the same period in 2012.

Interim City Manager Roy Tucker said a reduction in the amount of sales taxes collected from utilities during the reporting period may explain part of this month’s decline. But he is “not convinced this is the full explanation.”

“To get the full picture, we are currently working on further analyzing all sales tax reports for this fiscal year,” Tucker said. “Further, we are currently engaging in a discovery campaign to determine whether there are any commercial businesses which should have taxable sales, yet have no permit.”

In an attempt to find answers to explain the downward slide, Tucker said officials are looking at four particular factors:

• Whether there have been any measurable sales tax permit cancellations resulting from business closures.

• Whether businesses that have canceled sales tax permits are, in fact, out of business.

• Whether there are any sales taxes due that remain uncollected as a result of any payment or installment plans with the tax commission.

• Whether collections here are comparable with similarly situated municipalities, industries and vendors from prior years.

“From all of this, we should be able to determine with some certainty the cause of the decline in sales tax revenue,” Tucker said.

Despite the downward trend for sales tax collections, Tucker said sales tax collections for the general fund during the first three months of the fiscal year that began July 1 are down just more than $105,000. That loss, Tucker said, has been offset by less than projected personnel costs because of 39 positions that have remained vacant.

“This has resulted in a significant, though unintended, budget savings,” Tucker said. “I do not anticipate at this point needing to freeze any positions, but we will continue to maintain conservative spending.”

While sales tax revenue continued to lag behind budget estimates, the city’s share of the use tax ticked upward compared with figures reported a year ago. The September report shows Muskogee received $141,375 in taxes collected on purchases of out-of-state goods for in-state use or consumption, up 24.54 percent from the $113,514 disbursed for the same period in 2012.

While that provides some cushion for the city coffers, the lion’s share of the city’s use tax collections is dedicated to economic development. Beginning this year, up to $1.2 million of Muskogee’s use tax collections will be deposited in the city’s economic development fund.

Reach D.E. Smoot at (918) 684-2901 or dsmoot@muskogeephoenix.com.