June 25, 2009 — Sales tax collections are down in Oklahoma, the Tulsa metropolitan area, and across most of Rogers County.

The Oklahoma Tax Commission reported June 18 that $106,416,618 in sales tax collections was returned to 505 municipalities reflecting a decrease of $4,595,610 compared to June collections last year, a 4.14 percent drop. The June report primarily represents local tax receipts from April business.

Rogers County sales tax collections for the same time period were $763,829, down from $797,374 last year, a decrease of 4.2 percent.

With the fiscal year ending June 30, decreasing sales tax revenues means tighter budgets for next year.

Not all the news is bad. Owasso reports that FY 2008-09 sales tax and use tax revenues are predicted to exceed projections by 5 percent growth despite a year of national economic downturn.

According to the Owasso City Manager’s report issued June 12, the new budget year “will most likely have the smallest revenue growth this city has seen in several years ... but still growth.”

Though residential building permits for new construction in Owasso were down in January as compared to last year, an increase through May brought building permits issued in 2009 to 131 as compared to 133 issued through May 2008. Incremental growth is still anticipated in that area. Some of that residential development falls in Rogers County.

The majority of sales tax collected within Owasso city limits benefits Tulsa County.

Investment by national retailers in Owasso could boost sales tax and the overall economy of the community. A new JC Penney opened Feb. 27 on North 121 East Avenue. The Wal-Mart Supercenter on East 96th Street North has expanded, and a Neighborhood Market is coming to town.

“Where Albertson’s grocery store closed, a Wal-Mart Neighborhood Market is going in,” said Owasso Assistant City Manager Sherry Bishop. “It is scheduled to open in July.”

Catoosa also reported an increase in sales tax income over the course of the year.

Claremore and Tulsa, however, have struggled, reporting declining sales tax revenue in recent months. Tulsa sales tax dropped by 8 percent in May compared to 2008 figures and by 7.5 percent in June compared to the same time period last year. Those declines have sharply affected the city’s budget.

Tulsa passed a new city budget last week. There will be no reduction in the fire or police departments, according to Tulsa Mayor Kathy Taylor She said the tax revenue difference is in development.

“They (Owasso and Catoosa) have recently added new residential and retail,” said Taylor. “They have more space to develop. Rooftops provide retail.”

Taylor said not all states require municipalities to operate primarily on sales tax as we do in Oklahoma.

“It’s an erratic source,” she said.

“It’s the most volatile source of revenue to cities,” said Bishop. “Property taxes are a pretty stable revenue source. If you look at the taxes and fees you pay, some of them are much more stable than others.”

Bishop said even weather can affect spending patterns. Various factors can affect monthly tax collections from year-to-year.

“Grocery sales is a significant impact for most small cities,” said Bishop. “People buy groceries on the weekends. You can have significant sales tax impact when there are five weekends in a month. There can be lots of reasons for spikes and dips.”

Claremore has also struggled with declining tax income.

“Year-to-date, sales tax revenue is up — barely,” said Claremore City Manager Troy Powell. “The reason for that is the beginning of the fiscal year was strong which made up for the last three months which have been down. For the entire year, we should still be up a little bit over last year, but not significantly.”

The new budget allows for that downward trend, said Powell.

“Over the last three months there has been a downtrend which we expect to continue,” he said. “We expect that to continue into the new fiscal year and have budgeted accordingly.”

Powell said tax revenues are monitored monthly, and the city can make cuts if numbers come in lower than anticipated.

June disbursements for Rogers County municipalities are down across the board in Catoosa, Claremore, Chelsea, Inola, Owasso and Verdigris. Talala and Foyil are the exceptions with both showing large increases, but at $5,000 or less a month of sales tax income, those towns don’t make a significant impact in Rogers County numbers overall.

May disbursements for 2009 were higher than May 2008 taxes for Catoosa, Inola, Oologah, Owasso, and Verdigris.

In some cases, reporting could be the cause of extreme increases or decreases in communities.

May disbursements for Catoosa were up 18 percent and down almost 7 percent in June. Averaged together the two months show an overall increase of 5.4 percent which may be a more accurate indication of tax receipts than either month represented separately.

New business such as the Walgreens that opened this week could increase sales tax revenue in Catoosa in the coming fiscal year. As Taylor pointed out, Tulsa and Claremore are less likely to see large levels of future development. Both municipalities are land-locked by surrounding fencelines, though some have argued that Claremore should expand along SH 20 to the east in the direction of Will Rogers Downs Cherokee Casino.

The retail project known as the Oklahoma Plaza was to be located on SH 66 but that project has stalled. Development in that direction is also limited by city limits that intertwine with Verdigris. A SH 20 bypass that would have made the area more accessible to outside traffic is on hold by the Oklahoma Department of Transportation until Claremore finalizes or abandons plans for an elevated railway.

Development in rural communities may be slowing as well.

Oologah had a strong sales tax increase in May at $47,827 up from $35,945 for 2008 then declined in June to $34,117 down from $44,216 last year. Averaged together Oologah shows a 2.22 percent increase for May and June over the same time period last year.

With more people staying closer to home, annual festivities such as Inola’s Hay Day may reap larger than normal profits for the community.

Despite anomalies, there is indisputably a downward trend in sales tax collections. Municipalities, counties, and the state are adjusting for those decreases in upcoming budgets.

Decreases in tax collections are an indication of decreases in spending, and that can mean slower business, fewer jobs, lower incomes.

Sales tax revenue is but one barometer of economics, however. Powell has said utility payments show a more accurate picture of a community’s real economy. Sale tax revenue is affected by consumer confidence and a number of issues.

An increase in unpaid utilities indicates lost earnings in a real way, said Powell.