City faces sales tax slump
NORWICH – City sales tax revenue is down 5.8 percent compared to this time last year, based on data provided Monday.
Negative economic trends and unemployment rates nationwide are a direct cause, said city Finance Director William Roberts.
“This is virtually a nationwide effect,” said Roberts. “People have scaled back on their discretionary spending – people that are employed and laid off.”
About one-fifth of the city’s revenue stream relies on sales tax generated by stores, restaurants, bars and automobile sales, according to budget figures.
“There’s definitely a correlation with unemployment going up,” said Roberts.
Since January, the unemployment rate in Chenango County has averaged 9.2, according to state labor statistics. Over the same time period in 2008, the average was 6.3.
Normally such a dip in sales tax would put pressure on budget funds, Roberts explained, but the loss has been offset by an increase in money generated by ambulance calls.
“By the end of 2009, we could more than make up for a loss of $80,000 or $90,000 in sales tax revenue with a $120,000 increase in ambulance fee recovery,” Roberts said. “That has counterbalanced the other revenue loss.”
Ambulance fee recoveries are currently on pace to exceed 2009 budget estimates by $134,125, or 23 percent. Roberts said surrounding rural areas have been relying more on the city service in recent years. On average, Norwich has been brining in $13,753 a week on ambulance calls since February.
“I think the city is going to be OK for revenues this year and into next year,” Roberts said. “It’s the expenditures we are concerned with.”
Increases in state retirement fund fees are going up 30 percent for the city next year, an $128,861 increase. That, combined with no increase in annual state aid – estimated to be $1.146 million in 2009, the same as 2008 – could tighten the city’s budget in 2010.
“I don’t think it’s fair. I don’t think it should be legal,” said 5th Ward Alderman Paul Laughlin, a member of the Common Council’s Finance Committee, referring to the state’s pension increase. “The state lost the money because of the stock market. It shouldn’t be asking people, regular people, retired people, that are struggling to make ends meet now, to pay more so others can have a secure retirement down the road. If my pension fund were down and out, the company I worked for would cut my pension.”
The city is expected to start discussing and designing the 2010 budget in November.
With Christmas ahead, sales tax revenues could bounce back, Roberts added. Annually, collected sales tax more than doubles, sometimes triples, in December compared to what’s collected in the summer months.
Furthermore, retail and restaurant sales figures in general are moving in a positive direction nationwide – albeit slowly. After a drop in July, retail revenues across the county increased 3 percent, according to U.S. census statistics.
To date, the city has collected $880,615 in sales tax. By the end of September 2008, it had $934,531.
Negative economic trends and unemployment rates nationwide are a direct cause, said city Finance Director William Roberts.
“This is virtually a nationwide effect,” said Roberts. “People have scaled back on their discretionary spending – people that are employed and laid off.”
About one-fifth of the city’s revenue stream relies on sales tax generated by stores, restaurants, bars and automobile sales, according to budget figures.
“There’s definitely a correlation with unemployment going up,” said Roberts.
Since January, the unemployment rate in Chenango County has averaged 9.2, according to state labor statistics. Over the same time period in 2008, the average was 6.3.
Normally such a dip in sales tax would put pressure on budget funds, Roberts explained, but the loss has been offset by an increase in money generated by ambulance calls.
“By the end of 2009, we could more than make up for a loss of $80,000 or $90,000 in sales tax revenue with a $120,000 increase in ambulance fee recovery,” Roberts said. “That has counterbalanced the other revenue loss.”
Ambulance fee recoveries are currently on pace to exceed 2009 budget estimates by $134,125, or 23 percent. Roberts said surrounding rural areas have been relying more on the city service in recent years. On average, Norwich has been brining in $13,753 a week on ambulance calls since February.
“I think the city is going to be OK for revenues this year and into next year,” Roberts said. “It’s the expenditures we are concerned with.”
Increases in state retirement fund fees are going up 30 percent for the city next year, an $128,861 increase. That, combined with no increase in annual state aid – estimated to be $1.146 million in 2009, the same as 2008 – could tighten the city’s budget in 2010.
“I don’t think it’s fair. I don’t think it should be legal,” said 5th Ward Alderman Paul Laughlin, a member of the Common Council’s Finance Committee, referring to the state’s pension increase. “The state lost the money because of the stock market. It shouldn’t be asking people, regular people, retired people, that are struggling to make ends meet now, to pay more so others can have a secure retirement down the road. If my pension fund were down and out, the company I worked for would cut my pension.”
The city is expected to start discussing and designing the 2010 budget in November.
With Christmas ahead, sales tax revenues could bounce back, Roberts added. Annually, collected sales tax more than doubles, sometimes triples, in December compared to what’s collected in the summer months.
Furthermore, retail and restaurant sales figures in general are moving in a positive direction nationwide – albeit slowly. After a drop in July, retail revenues across the county increased 3 percent, according to U.S. census statistics.
To date, the city has collected $880,615 in sales tax. By the end of September 2008, it had $934,531.
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