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Johnson City sales tax revenues rise

October 10th, 2011 5:57 am by Gary B. Gray

You hear it all the time.

“Sluggish economy, downward trend, weak market and negative indicators.”

These are not only phrases; they’re realities. But when you pull out one specific set of numbers and take a close look, it makes you think.

Johnson City — here’s another popular term — “realized” a more than 11 percent increase in local sales tax revenues in July 2011 when compared to the same month last year. In fact, the city has recorded retail sales tax increases 15 of the past 17 months, with the July increase topping the charts.

Finance Director Janet Jennings made that pronouncement last week near the end of a special called joint Board of Education/ City Commission meeting at which a one-quarter cent sales tax increase was being discussed. The Johnson City and Washington County boards of education want the matter placed on the ballot in August or November in hopes that additional revenues would help fill a funding void.

“We started seeing the uptick in March 2010,” Jennings said Friday. “That was our first increase in a while. The only months in the past 17 months that we did not see an increase was May and June of 2010 versus the same months in 2009. We’re still behind. We’re not back to the level of revenues we were at before the recession.”
Jennings said the biggest problem remains the high unemployment rate. However, her opinion is that the scare created by the economic downturn may be starting to fade.

“I know people that make good money that said they were not shopping as much or eating out as much,” she said. “It’s just my opinion, but I believe there was a fear factor that came with the downturn. But I think people have settled in. I know housing is not up. But retail sales are up, and that tells me people are shopping.”

The downward spiral in retail sales revenue started in November 2008 and continued for 16 straight months, until February 2010.

“We hit our low in fiscal year 2009-10 with collections at $17,089,584,” Jennings said. “The most recent fiscal year 2010-11 closed at collections of $17,691,553, which puts us slightly above where we were in fiscal year 2006-07. You can see that we are gaining some good ground and are on a good positive track, but we still have some ground to gain to get back to the high point.”

To find the last high point, you must look all the way back to fiscal year 2007-08 when local sales tax collections totaled about $18.2 million.

Jennings said if the city experiences an average growth this year of around 3 percent by the end of this fiscal year, it will return to the high of 4 years ago.

Broadly speaking, the local economy has not been hit that hard, said Dan Hipple, East Tennessee State University professor of economics.

“If the national economy was growing this would be, as you would say ‘happy days,’” he said. “The local economy is not that bad, but the national outlook is gloomy. This causes people to refrain from spending. Confidence is essential. And on a national level, we haven’t recovered from the jobs lost in 2007 and 2008. If the national economy doesn’t begin to grow, it could mean bad news for the area.”

Meanwhile, there’s a strong indication that retailers are beginning to snag more customers by offering discounted merchandise.

The International Council of Shopping Centers announced recently that revenues for September rose 5.5. percent, with several retailers including Target, Limited Brands and Kohl’s posting strong gains using this method.

Though many retailers reported better-than-expected results in September, they may have to continue to offer even greater discounts as the holiday shopping season nears. But that could chew up profits and put both retailers and consumers right back where they started — fretting over the sluggish economy, downward trends, a weak market and negative indicators.

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