06/04/09 — State to county: Sales tax receipts 'gloomy'

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State to county: Sales tax receipts 'gloomy'

By Steve Herring
Published in News on June 4, 2009 1:46 PM

"Gloomy" is the word being used by the state in its correspondence with counties to describe the outlook for future sales tax receipts.

The state adds that it could take up to five years before sales tax revenues rebound to their 2007-08 level, Wayne County Finance Officer Pam Holt said.

The slowdown in retail sales, combined with the loss of sales tax dollars taken by the state to offset it assuming the cost of Medicaid, already has cost the county $3.6 million.

"I just hope that the $3.6 million is correct," County Manager Lee Smith said.

Sales tax revenues have been declining for the past several months, and at first blush, the December receipts had shown a marked increase. However, it wasn't an actual increase, but an adjustment made by the state.

The county has just received February figures that showed a drop of about $4,000.

"I am truly thankful it was no more than that," Smith said. "I didn't crack open a new Mountain Dew. We are just trying to preserve and stay where we are at now."

Smith said he does not have much hope the revenues will increase anytime soon.

"The word from the state is not to expect the same (small drop) in the next distribution," Mrs. Holt said. "The state is not giving us any hope."

Comparing sales tax revenues from one year to the next is "difficult," Mrs. Holt said. One complicating factor is the Article 44 sales tax proceeds that gradually are being siphoned off by the state.

The state will take all of those revenues beginning in October.

In February 2008, the county received a net of $282,736.97 in Article 44 revenues. For the same period this year, it received $138,892.79.

Mrs. Holt said that backing the Article 44 revenues out of the February total shows that the county received $948,976.13 for 2008 and $944,955.22 for the same period in 2009 -- a decrease of about $4,000.

Adding the Article 44 revenues makes the 2008 total $1,231,710.13 compared to $1,083,848.01 in 2009.

Further complicating the picture is a "hold harmless" provision for municipalities.

The legislation authorizing the Medicaid relief reverts a portion of the counties' remaining sales tax to municipalities to help hold them harmless from potential loss of sales taxes because of the legislation.

That provision is costing the county $1.3 million.

Smith added that it appears the revenue shortfall predicted by the state is going to be greater than anticipated.

Part of the problem, he said, was that the state had initially overestimated the revenues.

"We (the county) have always been extremely conservative (in estimates)," he said. "We had rather be wrong and the money come in higher than have a problem."

Commissioners next week will hold workshops on the county's $157.6 million budget proposal.

The June 10 workshop will get under way at 10 a.m. in the commissioners' meeting room on the fourth floor of the county courthouse annex. A second session, if needed, would be held Friday, June 12, from 8:30 a.m. to noon at the same location.

A public hearing on the budget is scheduled for Tuesday, June 16, at 10:30 a.m. The budget must be adopted by July 1.

The budget proposal is available for inspection at Smith's office and online at www.waynegov.com

Smith said the budget would be "frozen" July 1 -- the date by which it must be approved. The action will be taken, he said because of uncertainty surrounding the state and federal budgets.

"Anything is possible and I want to see where the economy will be in the next few months," he said.