08/16/09 — County sales tax revenue drops modestly

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County sales tax revenue drops modestly

By Steve Herring
Published in News on August 16, 2009 2:00 AM

Wayne County has experienced a slight slowdown in the hemorrhaging of sales tax revenues. However, County Manager Lee Smith said he is not ready to celebrate yet, and continues to advise that the county live within its means.

April's sale tax revenues fell by $312,992.07 from $1,463,972.70 in 2008 to $1,150,980.63.

That compares to a $702,896.28 fall for March from $1,853,542.44 in 2008 to $1,150,646.16 this year.

All told, the county anticipates a loss of $3.6 million in sales tax revenues compared to the same time period last year.

"We took a hit, a big hit, last year over sales taxes," Smith said. "I am not jumping up and down over one month. I am glad to see it, but in the next month it may fall back off. We are hoping the economy is starting to come around, but I think it is too early to determine that.

"I am not being really optimistic yet. I think we still need to live within the means we have."

On top of that, the sales tax cannot be separated from other budget issues, he said.

"We are going to live within the means we have," he said. "The thing we are going to have to evaluate, and this kind of gets into the budget and the state budget, and obviously with the state budget you have the federal budget behind that."

It appears, he said, that the county will take budget hits in health and social service in administrative reimbursement.

Some of those programs are mandated and the county must find out how the programs are going to be affected -- will they be cut back or reimbursements changed -- since the county will still have to carry those services out, he said.

"The best case right now is a $300,000 (county budget) hit," Smith said. "I think it will be worse, but if it is not much worse than that, then boy did we dodge a bullet. I am still not that optimistic about the turnaround."

Wayne County Finance Director Pam Holt agreed the sales tax is showing an increase, but that it is a slow process.

"We are anticipating a gradual increase over the next 12 months," Mrs. Holt said. "At this time we are projecting that it will take two to three years to return to the 2007 and 2008 sales tax revenue levels."

The sales tax actually comes to the county in four different flavors -- Articles 39, 40, 42 and 44.

Article 39 is the first 1 cent sales tax the General Assembly gave to counties followed by Articles 40 and 42 that are 1/2 cent sales taxes.

The county splits the Article 40 and 42 proceeds with the country schools. The schools receive 30 percent of the Article 40 revenues and 60 percent of the article 42 funds. The schools are required to use their portions of the funds for capital outlay such as vehicles, roofing projects and maintenance. They cannot be used for operations.

The county's portion goes into the general fund for operational use.

Article 44 started as a 1/2 cent sales tax. However, the county now receives half of that amount, and that will vanish in October.

The state is taking control of the Article 44 revenues in exchange for assuming the counties' share of Medicaid costs. The switch will be completed in October.

"Our saving grace over the last 24 months in our budget has been the state assuming responsibility for Medicaid," Smith said. "Granted the county took a (sales tax) revenue hit, but they (state) took $8.4 million of our cost and that helped us absorb some of these hits and additional costs over last two years."

Had that not have happened a combination of lost revenues and Medicaid costs would have left some counties on the verge of being broke, he said.