When the COVID-19 pandemic forced businesses to close or restrict their services in March and April 2020, all three cities in the Golden Triangle braced for a potentially crippling financial blow.
“We thought we’d have to hunker down for probably a good six months, if not more,” Starkville Mayor Lynn Spruill said.
Non-essential businesses statewide closed in April via an executive order from Gov. Tate Reeves, which also required Mississippians to “shelter in place.” But after Reeves allowed businesses to gradually reopen in May, overall sales tax collections in Columbus, Starkville and West Point returned to numbers comparable with previous years and even exceeded 2019 revenue at some points in 2020, according to data from the state Department of Revenue and from the cities of West Point and Starkville.
The 2-percent hotel/motel and restaurant tax revenue in all three cities also took an inevitable hit. Hotel/motel revenue has remained low as travel continues to be inadvisable, but restaurant tax revenue has bounced back with similar momentum to the overall sales tax collections, according to data provided by all three cities.
Based on past years’ data, Columbus usually brings in between $700,000 and $900,000 in overall sales tax revenue per month. Starkville brings in between $550,000 and $650,000, and West Point brings in between $180,000 and $210,000.
Columbus and Starkville each lost roughly $150,000 between March and May 2020, compared to the same time period in 2019, but exceeded the previous year’s monthly totals from July to October. Columbus brought in more than $8.2 million from January to October in both 2019 and 2020, with $18,000 more in 2019.
Starkville’s cumulative sales tax revenue of more than $6.12 million from January to October 2020 was more than $12,000 higher than the amount from the same time period in 2019, which exceeded $6.11 million.
West Point garnered more sales tax revenue for each month of 2020 compared to 2019 despite the pandemic, according to city and state data, for a total of $2.01 million from January to October 2020, more than $290,000 above the amount for the same time in 2019.
“We’re meeting budget numbers,” West Point Mayor Robbie Robinson said. “We’re not flush with a surplus by any means, but we’re meeting our numbers and keeping our head above water.”
Restaurant sales tax collections all returned to monthly amounts comparable to 2019 after the initial impact of the first few months of the pandemic, though the net revenue between 2019 and 2020 varied from city to city. Starkville garnered $178,000 more in restaurant tax revenue by October 2019 than by October 2020, according to city data, and the city lost almost that much from March to June 2020 before sales returned to normal.
Officials in all three cities attribute the rebound to a variety of behaviors — people staying in town instead of traveling, a widespread push for people to support locally-owned businesses and restaurants successfully shifting their business from sit-down dining to carry-out and delivery service.
Spruill said she also thinks people’s decisions not to travel or to dine in at restaurants led to an increase in grocery sales that contributed to Starkville’s overall tax collections.
Predictions and precautions
The Columbus-Lowndes Convention and Visitors Bureau did not collect restaurant tax revenue during the 2018-2019 fiscal year after the city and county governments did not reach an agreement in 2018 to renew the tax collection. Therefore Columbus’ restaurant tax collection during the first five months of 2020 is not comparable to 2019, but CVB director Nancy Carpenter said revenue still came in stronger than expected throughout 2020.
“People were not going on vacation, they were staying at home, and even if they were picking up a restaurant order, you still get the 2-percent tax,” Carpenter said.
The CVB’s robust tourism advertising efforts throughout the pandemic probably also contributed to solid tax revenues after the initial decrease, she said.
Predictions for how the ongoing pandemic might affect the local economy were reflected in the Fiscal Year 2021 budgets in all three cities. Starkville and Columbus’ fiscal years start Oct. 1 and end Sept. 30, while West Point’s fiscal year starts July 1 and ends June 30.
In June, Robinson proposed a Fiscal Year 2021 budget that did not increase West Point residents’ property taxes but asked department heads to cut 10 percent of their budgets. Columbus also chose not to increase its tax millage rate when the city approved its FY 2021 budget in September.
Meanwhile, also in September, Starkville aldermen approved a 2-mill hike in its FY 2021 budget in order to offset a predicted $1.1 million shortfall. Sales tax revenue collection reports lag two months behind, so Starkville officials decided to be cautious while formulating the budget, Spruill said.
“We were never quite sure as we were preparing for the 2021 budget that the rebound was going to continue and that it was going to sustain itself,” she said.
Hotel/motel tax revenue in both Starkville and Columbus hovered at about half of 2019 monthly amounts from March 2020 onward. Two hotels in Starkville, the Comfort Suites on Russell Street and the Hampton Inn on Blackjack Road, were not available to the public from August to December because Mississippi State University rented them to house students in quarantine due to COVID-19 exposure.
It remains to be seen how much the recent increase in COVID-19 cases locally and statewide will discourage people from spending money in the community, Spruill said. Positive cases in Lowndes, Oktibbeha and Clay counties all increased weekly for most of November and December.
“Starkville has always had an incremental increase in sales tax numbers over the years,” Spruill said. “That’s one of the things we’ve been successful in counting on. I don’t know if we’ll be seeing that (in the coming months), but I’ll be fascinated to know if we continue to show some level of growth. These days, I’m almost happy if we just hold our own.”
Tess Vrbin was previously a reporter for The Dispatch.
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