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Sales tax on upswing
Published 7/16/2008 in News : Area coverage
By STEPHANIE FARLEY
sfarley@gctelegram.com
In a tight budget year for the city of Garden City, Finney County and other taxing entities, increased sales tax revenue is allowing some relief.
Sales tax revenues have been up for both the city and county, and Garden City Community College economics instructor Chip Marcy says that can point to, among other things, retail sales being fairly strong.
Sales tax receipts can be used as an indicator the economy's good, Marcy said. While it's unclear exactly which sectors of retail are leading to increased revenue through sales tax, vehicle sales have been cited as one possible reason, according to City Finance Director Melinda Hitz.
The city receives sales tax revenue, as well as receiving a certain portion of the county's sales tax revenue. The county receives three-fourths of a cent for sales tax, and the city receives a cent from sales within the corporate limits of the city.
According to the figures, the city's sales tax receipts were at $398,458 in April -- up about 10 percent from April 2007. The 2008 receipts for the city in March were $426,812; $361,119 in February; and $418,336 in January, with figures being up from a half-percent to 23 percent over last year.
The county's sales tax revenue was at $420,838.79 in April, up about 29 percent from 2007's $324,986.32.
A caveat to that, though, Marcy said, is that prices have been lower on vehicles in the area because of the recent hail storms and damage.
Plus, there have been the economic stimulus checks from the government possibly giving a push to recent buying that might not last, he said.
But, for now, it appears sales tax revenues are up, which is a trend Hitz, County Treasurer Raylene Dick and others with the city and county would like to see continue.
And despite the national outlook on the economy being poor and no guarantees for an upswing in the local economy, Marcy said people might be willing to spend money regardless if there's no perceived financial threat to them.
In other words, Marcy said, there are a lot of factors that could be contributing "to the economy holding its own here."
Mario Reyes, general manager for Regency Auto Group, which handles used car sales, has seen the local business defy trends that are occurring nationally.
In June, there was talk Toyota Motor Corp. could overtake General Motors Corp. in monthly U.S. sales for the first time in June. That ended up not happening, with General Motors beating Toyota to keep its U.S. sales lead.
However, GM sales dropped 18.2 percent; Toyota's U.S. sales fell 21.4 percent; and Ford Motor Co. saw its sales fall nearly 28 percent. Chrysler's sales were down 35.9 percent in June.
Analysts' predictions of another double-digit loss in June sales came true, partly, they said, because buyers are steering clear of bigger vehicles and seeking hybrid cars.
But for Reyes, the last several months for Regency have been good.
He estimated May sales were up about 100 percent from what they normally are, and he predicted June was up about 25 percent.
"So it's been wonderful," he said. "It's been great."
While Reyes isn't certain why vehicle sales for the business are up, he said Regency has seen a lot of repeat and referral business. He said there are a lot of previous customers returning -- some of them now because of insurance and other checks related to storm damage.
Reyes said he recognizes the trend that seems to be occurring locally isn't exactly what's happening nationwide.
"You see the news that plants are shutting down," he said, adding the national outlook for the vehicle industry isn't good.
But that's not the case here, he said. "God willing, it'll continue," he said.
Storm Denison also has seen a steady climb in vehicle sales at Western Motor.
"2008 has been an awesome year," he said as far as sales.
Mike Shook, sales manager with Lewis Motors, said he definitely has seen an increase in the business' car sales in the last two months.
He said a lot of the bigger companies, such as Nissan and Chevy, are throwing out incentives and rebates to buyers, and consumers are trading in their larger vehicles like SUVs for cars because of the cost of gas.
Hitz and City Manager Matt Allen said some of the increased sales tax revenue is related to the higher cost of fuel, which has caused more people to stay closer to home and shop.
Raylene Dick attributed some of the increase to a good harvest in 2007, an increase in vehicles being purchased and other repairs being made because of the hail damage.
Hitz said the economic impact of the hail damage hasn't been seen yet in the sales tax receipts, but that'll come.
Allen said the city, county and area have taken several hard economic punches, including the ConAgra fire and reduction in the sales tax demand transfer under former Kansas Gov. Bill Graves' administration.
It's nice to be dealing with an increase, he said.
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