Sales tax revenue collected in Starkville this March was down 10.8 percent from March 2019 totals, and April 2020 produced 13.4 percent less than April 2019.
While that’s not the 30-percent drop Mayor Lynn Spruill and the city’s board of aldermen braced for in the wake of the restrictions they implemented to curb the spread of the COVID-19 pandemic — including limiting social and business gatherings and mandating restaurants only serve customers via drive-through, takeout and delivery — it still comes out to nearly $1 million lost if the trend holds for the rest of the fiscal year.
For a city with a budget of about $23 million — $7 million of which comes from sales tax revenue — that’s no small loss.
“That’s a significant chunk of change for any city, especially Starkville,” Spruill said.
Columbus is in a similar situation to Starkville. The city received more than $118,000 more tax revenue in April 2019 than it did in April 2020, a decrease of 14.4 percent.
The decreases have led to staffing cuts in both cities. In late April, Starkville furloughed 15 percent of its employees and approved a 20 percent pay cut for Spruill, city aldermen and department heads. Columbus reduced city employees’ hours to 30 hours per week and instituted a hiring freeze.
Columbus Ward 6 Councilman and Vice Mayor Bill Gavin acknowledged the importance of the city’s stringent restrictions for the health of its citizens, but he said the shortfall will pose problems down the line when budgets need to be balanced and projects need to be completed.
“You have to find the money somewhere, and it’s just not there in sales tax dollars,” Gavin said.
Spruill and Ward 2 Alderman Sandra Sistrunk said in late April that Starkville is in solid financial position to pay for its Cornerstone Park project — which is a special sales tax-backed plan voters approved in summer 2019 to build a tournament-ready ball field complex off Highway 25. As of May 1, $14 million of a possible $25 million in bonds had already been issued.
But the mayor said the city must be careful in how it plans for, and whether it can afford, similar projects, which often depend on sales tax revenue.
Spruill said that hyper-cautious attitude will be the norm for at least the next year or so, as city leaders know they must be more frugal.
“It certainly creates a situation where we are going to have to at least downsize to a certain extent,” Spruill said.
West Point’s sales tax revenue increases
West Point Mayor Robbie Robinson and the city’s board of selectmen have already done that. The city has asked department heads to cut 10 percent of their budgets for Fiscal Year 2021, which starts there July 1 (In Columbus and Starkville, fiscal years begin Oct. 1).
Ward 5 Selectman Jasper Pittman said some had already slashed that amount over the course of Fiscal Year 2020.
“We’re in line to have a healthy budget given the circumstances,” Pittman said.
Robinson also instituted a policy where any purchase more than $500 by the mayor’s office must be reviewed by the board.
Pittman said the changes align with the “frugal” nature of city government to begin with.
“You can’t spend what you ain’t got,” he said. “Did we see this pandemic coming? No. But at the same time, it wasn’t really alarming because we’re well below our means anyway.”
By all accounts, West Point has done well. Though the city’s “tourism tax” — a 1-percent sales tax at restaurants and hotels — was down roughly 30 percent for March and April, sales tax revenue increased 27.9 percent from April 2019 to April 2020. March produced a 15.2 percent year-over-year jump.
Partly because of that, West Point has so far avoided staff furloughs and layoffs.
“It really surprised me that we went up like that,” Robinson said.
Robinson said a possible reason sales tax revenue in West Point increased was because residents stayed in town to shop at local grocery stores rather than going on vacation or traveling to Columbus or Tupelo for things they needed.
He said the city is budgeting a 10-percent decrease in sales tax revenue for Fiscal Year 2021, looking forward to a “conservatively good” year, though not a strong one.
If the city makes it through FY 2021 in good shape, Pittman said, a promising 2022 could be on the way.
“West Point, we’re alright,” Pittman said.
‘Slow return’ likely
On Wednesday night, Gavin went out to eat at a restaurant in Columbus. Even with a 50-percent capacity limit, the councilman said the place was nowhere near full.
It’s part of what he called a “slow return” to consumer confidence in the area. According to Opportunity Insights’ Economic Tracker, total spending by all consumers in Lowndes County as of June 10 is down 32.7 percent from what it was this January — the lowest mark among the 17 Mississippi counties showing data. At its lowest point, March 29, it was down 58.9 percent.
Statewide consumer spending is down 6.6 percent as of June 10, according to the tracker. Nationally, it is down 11.3 percent.
Spruill said May sales tax revenue — which will be distributed by the Mississippi Department of Revenue to cities in July — will be pivotal in determining if the rebound after the late March nadir will continue.
Still, she said, things won’t be back to normal just yet.
“I think there’s still a whole lot of people who are not going to come out,” Spruill said.
For Starkville, at least, Ward 1 Alderman Ben Carver said he hopes the football season at Mississippi State will help. A key financial factor for the city, the sport drew an average of 56,190 fans to Davis Wade Stadium for home games last fall.
But M. Kathleen Thomas, professor of economics and head of the finance and economics department at Mississippi State, cited positive COVID-19 tests for football players at MSU and Alabama as reasons that practice — let alone game play — is still up in the air. Attendance restrictions likely to limit capacity to 50 percent or less are also a factor.
“If half the people who came last year to the opening football game show up now, that’s definitely going to lead to a downturn,” Thomas said.
Thomas, who said she and her family have been staying at home in Columbus barring essential trips, noted consumer demand will be hard to predict. Mostly, it will come down to how much risk people are willing to assume — and tailgating, sitting in the bleachers and eating at a downtown restaurant could be too much for some.
“If people are still worried about being in contact with asymptomatic individuals who might be carrying COVID and getting sick, it doesn’t matter that officially the economy is open,” Thomas said. “You’re gonna stay home and not spend money.”
Consequently, Thomas said, the economy and the public health crisis of COVID-19 are “inextricably linked,” and a slow recovery is likely.
But she can’t be sure. Thomas said the pandemic is like nothing she’s seen in her lifetime, and its future effects on Starkville, Columbus, West Point and cities nationwide are just as unclear.
“I think we are still just kind of holding our breath to see what this is going to be for state and local governments,” Thomas said.
Theo DeRosa reports on Mississippi State sports for The Dispatch. Follow him on Twitter at @Theo_DeRosa.
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