NORWICH – According to the 2012 adopted budget, the city is bringing in more sales tax revenue than expected, suggesting that one needs go no further than a local retailer to see signs of an improving economy.
The city originally projected $1,340,000 in sales tax for the 2011 fiscal year, according to City Clerk and Director of Finance William Roberts, but with an improving economy and the success of local businesses this year, the city claims this projection could be exceeded by nearly $73,000 once the final tallies are known – the highest annual sales tax revenue collected since 2008. This is more than welcome news for the city, said Roberts.
“We won’t know the final outcome until January ... But retail is ahead pretty much nationwide,” said Roberts. “The economy in general is improving and retail business is improving.”
At the end of November, sales tax revenue in the city reached $1,265,000 whereas this time in 2010, sales tax revenue was $1,162,000, said Roberts – a difference of $103,000 over the last year, which is enough evidence to support the claim of a “slow but steadily improving economy,” he added.
Roberts specifically mentioned the opening of the new Byrne Dairy on East Main Street as a prime contributor in this year’s increased sales tax revenue. For the first time in years, the city is getting sales tax from gasoline – money previously not available as every other nearby gas station falls outside city limits.
Currently, real property tax accounts for 35.4 percent of the city’s revenue sources as seen in the 2012 adopted budget whereas non-property tax items, including sales tax, account for only 20.9 percent.
“The growth of alternative revenues other than property taxes has been and will continue to be a key to success,” Roberts stated.
The city’s 2012 budget also indicates that while sales tax revenue was more than expected this year, it will not keep property taxes from a slight increase. Residents can expect to see a rate increase of 2.89 percent in the coming year.
Despite growing sales tax revenue, the city is facing financial challenges regarding tax delinquency among some residents and money owed to the state retirement system.
“Since there are more delinquencies on properties than usual, our expenses for legal advertising are higher than usual,” explained Roberts. Tax delinquency has led to an increase in legal fees for the city and a budget transfer was recently approved by the city council in the amount of $5,400 to help cover some of these emerging fees.
Also, retirement charges to the city have steadily increased by nearly 20 percent for the last seven consecutive years.
“Fortunately, our stronger than budgeted beginning general fund balance ... plus higher revenues and lower expenses than planned, have enabled us to again pay the retirement system charges,” said Roberts.