Sales tax revenue at all-time high mark

1/29/2013

City collects more than $5.52 million.

City collects more than $5.52 million.

BY SCOTT AUST

saust@gctelegram.com

Garden City collected more than $5.52 million in sales tax in 2012, the largest year it has ever had, according to city officials.

Melinda Hitz, city finance director, said the city collected 5.44 percent more sales tax in 2012 compared to 2011, which saw $5.24 million collected.

"In my opinion, the increase in sales tax is due to a good agricultural economy and also a pull factor that brings a lot of people from surrounding communities into Garden City. We have a couple of stores here that people travel long-distance for, and that would be Sam's Club, Home Depot, Walmart, Target," Hitz said.

Overall, people buying goods and services within Garden City pay an 8.45 percent sales tax. The state collects 6.3 percent, Finney County and Garden City each collect 1 percent, and 0.15 percent is for the Horse Thief Reservoir management project.

The city budgeted $5.5 million in estimated sales tax revenue for 2013, and $5.45 million in 2012 collected from its 1 percent tax.

In addition to the pull factor from retailers, Hitz said other possible reasons for healthy sales tax revenues could include increased activity in the oil and gas sector, as well as workers in town finishing up the new high school construction project.

"We've had a lot of people in from out of town, and it continues to be that way, especially with the oil and gas boom that's moving toward the west," she said. "The oil and gas economy is bringing a lot of people into Garden City. I think you'll notice that most of the motel rooms are full during the week. Plus, with the new high school, we were filled with contractors up until that project was completed."

Mayor David Crase said strong sales tax receipts are good for the health of the city's economy. He is confident, barring something drastic happening, that the city will be able to keep its sales tax collections steady.

"With the planned opening of Menards later on this year and the addition of the other retail stores going into that shopping center out there, and with the oil and gas coming in, new hotels going up, the prospects for the city really, really look good over the next five years at least," Crase said.

Sales tax collections went over $5 million for the first time in 2008, before dipping slightly in 2009 to $5.11 million and to $4.92 million in 2010. In 2011, sales tax collections rebounded to $5.24 million.

Hitz said the economy was down a little bit in 2009 and part of 2010, but 2008 was a pretty good year due to the Cash for Clunkers program and the addition of Sam's Club.

"We didn't have it before, and it brought a pretty good draw," she said.

While city officials are optimistic about the economic benefit the coming retail development anchored by Menards will have, Hitz said the city takes a more conservative approach when preparing revenue projections in its budget. The city budgeted $5.5 million in 2013 from its 1 percent tax, a small increase from the $5.45 million it budgeted in 2012.

"We're hoping it brings in new customers from outside Garden City. we need to get our pull factor increased if we're going to see any increased sales tax," she said.

Garden City's 2013 budget is $69.5 million overall. Out of the city's $19.7 million general fund, $9.4 million comes from sales tax revenue, a number that includes the 1 percent city sales tax; the city's share of the county's sales tax, roughly 48 percent; and a consumer use sales tax collected from Internet sales that amounts to about $675,000 per year.

Hitz said the city always has been conservative in its revenue projections in case something doesn't come through as planned. If revenue does turn out better than anticipated, it adds to the cash balance at the end of the year.

Crase is optimistic about the city's future, and about Garden City continuing to become a commercial hub for the region that has long been a goal for elected officials.

"I think this is showing we're achieving that. But just because we have hit this peak with the sales tax doesn't mean we stop and sit, or rest, and not proceed further. We've got the momentum, and we need to keep it going," he said.

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