Many Cities Expecting To See Significant Dip In Sales Tax Revenue

NORTH MS. (WCBI)- A statewide stay at home order, along with restrictions and closings of businesses for nearly two months, are hitting city budgets pretty hard.

Sales tax collections are expected to take a big hit and that means less money coming into they city’s accounts.

Louisville Mayor Will Hill said 2020 was off to an impressive start.

Through February, sales tax collections were sitting at more than $134,000, but then came COVID-19.

Mayor Hill said he expects that number to now take a dip.

“I go back-and-forth, and there are moments I say that we’re probably subject to 15 to 20 percent decrease in our sales tax revenue, which is a substantial part of our annual revenue,” said Mayor Hill. “I’m just pulling the numbers based on looking at where we’ve been and what our trends have been.”

The sales tax makes up roughly 45 percent of the city’s annual revenue.

With a much anticipated setback coming, the mayor said they’re now operating on a tighter budget…

“We’re going to be operating as efficiently as we can, managing all of our expenses,” the mayor explained. “There may be things that we’ve needed to do that we may have to put on the back burner, but we need to plan and we need to plan appropriately. Just because it’s budgeted doesn’t mean we’re going to be able to spend it in this year, we’ll need patience from everyone as we look towards long-term projects and spending.”

It’s a similar story up the road in Starkville.

“ We took what we anticipated and what the Department of Revenue had said was going to be the expected shortfall in sales tax, and we applied that to us,” said Starkville Mayor Lynn Spruill. “I think at a minimum we’re looking at a $1.3 million revenue loss. It could quite conceivably go higher than that, but we have responded as though it’s going to be $1.3 million in order to cover for this next period of time.”

To help absorb the blow, Mayor Spruill said they were forced to furlough employees and cut the salaries of all department heads and city officials, including her own, by 20 percent.

Spruill said this is all in an effort to help them make up for the loss in revenue they’re anticipating.

“A soon as we get the numbers in from the March, then we’ll have a better idea of how adequate that response was or if we have to do more and seek more in terms of cuts,” Mayor Spruill expressed. “We’re kind of waiting on pins and needles to see what the number is going to look like.”

The Mississippi Department of Revenue is expected to release sales tax collections for the month of March by the end of the week.

They will be the first numbers showing the direct impact on sales tax due to COVID-19.