A nearly half-million-dollar deficit in Columbus” sales tax collections during the first nine months of the 2009 fiscal year has city officials struggling to determine figures for the Friendly City”s upcoming budget.
Since Columbus” 2009 fiscal year began in October 2008, the city has collected about $481,000 less in sales tax revenues when compared to the same time last year, according to Columbus Chief Financial Officer Mike Bernsen.
“The sales tax collections are down 6.4 percent from this time last year,” Bernsen said. “When we budgeted for this year, we budgeted a flat number for the sales tax collections because we knew they would be down this year.
“But we didn”t know it was going to be this bad,” Bernsen added.
Although fewer shoppers during the past several months have been hitting local retailers, a surge of industrial developments and higher property values have brought in more ad valorem property taxes than expected, Bernsen explained.
“Our ad valorem tax collections are up, and the city has actually come out better than they planned in that area,” Bernsen said. “The tax collections are bad right now, but they could be a lot worse if the ad valorem taxes weren”t up.”
Because city officials now are working to construct the city budget for the 2010 fiscal year, which begins Oct. 1 this year, they are striving to forecast an accurate number for next year”s sales tax numbers.
“We are in the budget process now, but we don”t have a clue where the economy is going to go from here,” Bernsen said. “There are some optimists who say we should budget a higher number than we did this year. But I am going to recommend that we drop it a little.
“There were a lot of things that we just didn”t buy this year because we didn”t have the money,” Bernsen added. “But I think the city has done a good job of handling the situation.”
According to reports from the Mississippi Tax Commission, Columbus in June brought in about $832,000 less in sales tax collection when compared with January.
Across the city, businesses in several categories saw their sales drop nearly $12.3 million between January and June, according to the reports.
The biggest sales tax collection drops came in the food, general merchandise and miscellaneous retail categories. Although automobile-related sales tax collections were up nearly $18,000 in June when compared to January, overall auto sales are down significantly compared to past years, Bernsen explained.
“The main drop has been in auto sales,” Bernsen explained. “That has definitely been the biggest contributor to the sales tax decrease.”
Although the city”s sales tax collections this fiscal year have been down significantly, city department heads are not planning on laying off any employees, explained Columbus Mayor Robert Smith.
“The main thing we have been stressing to the department heads is that they need to be frugal and make sure they don”t spend more than they did last year,” Smith said. “We absolutely don”t want to do any layoffs unless it is absolutely necessary for the city to function. That is definitely a last resort.
“We may have to make some cuts next year, but we are trying to do that without laying anyone off,” Smith added.
Although Columbus this year is operating with a leaner budget than it has in years, the city is in “good shape” when compared to other cities throughout the state, Smith explained.
“So far, we have actually been fortunate,” Smith said. “In talking with some of the other mayors, it sounds like Columbus is actually in pretty good shape financially when compared with other cities across Mississippi.
“My wish is that we can just stay where we are right now until things get better,” Smith added.
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