Columbus city officials said Thursday they met with representatives from the Mississippi Department of Revenue to address current fiscal year general sales tax declines.
For the last reported five months, FY 2012-13 collections have been down from FY 2011-12’s. Most recently, the city’s collections came to $626,213.89 this January, an almost two percent decline from the $650,387.47 earned in January 2012.
At the midway point of the fiscal year, the city has collected $4,287,494.72. If that figure is matched for the second six months, the city would be on pace to collect $8,574,989.44– 2.61 percent less than FY 2011-12’s total of $8,776,381.04.
MDR collects 81.5 percent of the seven-percent sale tax from municipalities and distributes the remaining 18.5 percent back to the municipalities.
Mayor Robert Smith, Chief Operations Officer David Armstrong and Chief Financial Officer Milton Rawle met Wednesday with MDR officials to discuss the lower numbers and request a more specific evaluation on contributing factors. To start, Armstrong said, representatives pointed to the loss of two major retailers (the Sears location being one of them) and delinquent property taxes as possible reasons.
“Everybody is concerned,” Armstrong said. “We’re just trying to figure out why (figures are declining). (MDR is) not going to tell you ‘The reason you’re down is because of this business, this business and this business.’ We knew that but we were looking more toward other trends. (MDR officials) said, ‘We may not be able to say (now), but what we’re going to do is we’re willing to look further into this and try to figure out what’s going on.”
MDR Government Affairs and Communications Officer Kathy Waterbury said there is a process the agency follows in reviewing city diversion payments from sales tax.
“In this situation, the Department of Revenue was contacted by (Smith) to assist in reviewing the sales tax diversion received by the city,” Waterbury said. “It is not unusual for a city to ask us for assistance in reviewing diversion figures.”
She said city diversion is based on where businesses are located. When reviewing city diversion payments, each business is assigned a city number based on location.
“There are several factors that can affect a municipality’s diversion, such as an incorrect city number, business closures, audit payments and delinquent accounts,” she said. “We review the cities’ tax accounts to determine if there are any irregularities that could affect diversion.”
Another factor to consider, Armstrong said, was that FY 2011-12 was a more positive one than usual for revenues in Columbus.
“Last year was a very good year in sales tax,” he said. “I think one of the reasons everybody acknowledges is the people out there building KiOR. They’re shopping here and eating here. It’s not that we’re having a bad year though we’re down almost $97,500 (from last year). We probably projected too high this year and were more optimistic than we should have been.”
Smith said the city would receive a boost in December because it would receive anywhere from $325,000 to $40,000 from its agreement with KiOR that was not factored into the city budget. He said the city will continue to work closely with the Golden Triangle Development Link to recruit more retail development as they have been able to do to attract industrial development.
“The city of Columbus and Lowndes County has been blessed here during the economic downturn compared to a lot of other municipalities across the state of Mississippi,” Smith said. “With the Eurocopter expansion, PACCAR (and) Severstal expansion, there are people constantly working in those places and they spend money in Columbus.”
Armstrong said the official figure for February sales tax earnings would be available later this month.
Month 2011-2012 2012-2013
Oct. 719,011.81 724,776.51
Nov. 724,333.48 699,400.48
Dec. 698,496.84 683,562.42
Jan. 715,104.16 694,431.48
Feb. 877,648.84 859,109.94
Mar. 650,387.47 626,213.89
April 735,788.97
May 809,699.99
June 728,609.24
July 717,112.88
Aug. 741,252.59
Sept. 658,934.77
Nathan Gregory covers city and county government for The Dispatch.
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