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June 14, 2009

Jacksonville’s sales tax numbers spike

By Kelly Young

kyoung@jacksonvilleprogress.com

Local sales tax numbers, which have been moderately but consistently strong during the past few months, exploded in June as Jacksonville started to fully reap the benefits of Energy Transfer’s new natural gas pipeline and enjoyed the largest sales tax gain in several years.

According to the state comptroller’s office, Jacksonville received a June sales tax allocation of $279,977.09 on Friday — a full $62,579.14 (28.78 percent) larger than last June’s amount of $217,397.95.

The prodigious June figures also resulted in the city’s year-to-date sales tax percentage more than doubling, as it climbed from 3.62 percent in May to 7.27 percent this month. As a result, Jacksonville has received $109,166.07 more in sales tax revenue in Calendar Year 2009 then it did in the first half of last year, and has seen sales tax growth for four straight months and in nine of the last 12.

“I don’t think we have had a month this strong during the three years that I have been with the city. I knew they would have an impact, but I didn’t expect the pipeline to have such a positive effect on our sales tax,” said City Manager Mo Raissi. “The economic impact we are seeing from them is both from the construction company buying local materials for the project and the pipeliners themselves spending their money in town and staying in our hotels, motels and camping areas.”

The state’s June allocation represents sales which took place in April and were reported in May. Preliminary work had started prior to April, but it was during that month that the pipeline work began in earnest and that most of the construction workers journeyed to Cherokee County.

Raissi said he spoke this week to some officials working on the Energy Transfer pipeline, and they said the local work is expected to dry-up in the next two weeks or so. Which means the pipeline dollars will continue to flow into Jacksonville until the end of June and will continue to bolster the sales tax allocations through the August payment.

But the pipeline is not the only catalyst leading to June’s sales tax boom — a very successful Mud Nationals competition was held in April — and that event alone is estimated to inject $2.5 million into the local economy each year. The upcoming Tomato Fest and Tops in Texas Rodeo are also expected to buoy sales tax figures in the coming months.

Jacksonville is not the only Cherokee County community benefiting from the pipeliners. Every sales tax collecting municipality in the county experienced growth in June: Rusk, up 1.88 percent; Alto, up 16.92 percent; Cuney, up 35.41 percent; New Summerfield, up 28.06 percent; and Wells, up 6.17 percent.

Meanwhile, the rest of the state is suffering from sales tax revenue withdrawal. The city of Tyler and the state average both experienced sales tax restriction for the fourth straight month. Texas collected $1.77 billion from sales tax in May, a 5.2 decrease compared to May 2008.

“Weakness throughout most sectors of the economy resulted in a significant decrease in May sales tax collections. While year-to-date sales tax revenue is up 0.5 percent for state fiscal 2009, further declines are expected this year,” said Texas Comptroller Susan Combs.

Considering the floundering state and national economy, the city manager said Jacksonville’s sales tax windfall couldn’t be more perfectly timed.

“For us to be seeing these numbers, especially at this time and in this economic environment, you couldn’t ask for anything better than this,” Raissi said. “We are more than pleased with the recent sales tax numbers, and with Tomato Fest this month and the rodeo next month, I think we will be able to maintain this momentum through the final three months of this budget year — it would be great if we can finish up this year on such a strong note.”

The comptroller’s next local sales tax allocation will be made July 10.

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