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Tuesday, October 24th, 2006

Sales tax revenue is down

By Timothy Cox
Sales tax collections are off about 1 percent for 2006, although Mercer County remains on course to meet original projections.
The county has collected $3.029 million through 10 months. That figure is off less than 1 percent from estimates for the year; five months this year have generated more taxes than the same month last year and five months have yielded lower collections.
The tax shortfall is not enough to cause the county any budget headaches, county Auditor Mark Giesige said. When this year's county budget was crafted, Giesige estimated sales tax collections of $3.5 million for the year.
Giesige predicted this week that sales taxes still will top the $3.5 million plateau and could come close to $3.6 million.
The decrease in sales taxes over last year shows that retail sales have been slightly lower this year, Giesige said. A variety of economic trends could be influencing local sales tax collections, he said.
Sales could have been boosted last year when auto dealers offered "employee pricing" and no-interest deals to lure customers. Retail sales could be softer this year because consumers have been squeezed by higher fuel prices for most of the year. Wal-Mart and other retail giants have said in corporate earnings reports that high fuel prices are curbing consumers' shopping habits.
Some local officials have predicted a significant upward spike in sales tax collections when the Wal-Mart-anchored Harbor Square shopping center opened about 18 months ago. The increased tax collections failed to materialize.
There are numerous possible reasons why sales tax collections did not rise measurably when the new shopping center opened. The old Wal-Mart was closed and non-taxable food items make up about half of the new store's inventory. Plus, some other businesses presumably lost business to the new Wal-Mart. Most of the other businesses in the square were pre-existing and simply moved across the street into the new building.
Giesige said he expects the Menards home improvement superstore to be built at Harbor Square to positively affect sales tax revenue. The chain store is to open a Celina site about a year from now on the west end of the Harbor Square property on Havemann Road.
Almost the entire stock of Menards will be taxable and there are few similar businesses around for the store to draw customers from, Giesige said. The Menards store should keep local residents from going to similar stores in Lima and elsewhere and should also draw shoppers from the surrounding community, he said.
"I expect we'll see a greater effect from Menards than Wal-Mart because it will keep people from going to Lima to spend their money," Giesige said.
The Menards store is scheduled to open before Christmas 2007.
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