OUR OPINION: Tax collections suggest growing economic energy

By NEMS Daily Journal

If tax collections measure economic strength, Tupelo’s vitality increases by the month in the 2012 fiscal year, which runs until Sept. 30.
Collections for the quarter-cent water supply district tax, the 2 percent tourism tax and the 7 percent general sales tax are running ahead of projections, and barring dramatic and unexpected reversals will set records when the books for 2012 are closed.
A spread sheet of city collection to date for the budget year, provided by City Clerk Kim Hanna, shows that sales tax collections through the May report (for March), the last official statistics, have increased over the 2011 budget year for the first eight months of the 2012 fiscal cycle.
Tupelo’s general sales tax collections last topped $17 million in 2007-2008, then dropped sharply in the teeth of the recession, declining approximately $1 million.
In a longer term view, Tupelo’s sales tax collections increased every year except three from 1980 through 2011. The years of decline were FY2009, FY 2001 and FY 2003. Under a 5 percent statewide sales tax rate, Tupelo collected about $3.11 million in 1980. Legislative action increased the sales tax statewide to 6 percent and then 7 percent, in 1992.
A slow but steady climb has been measured since the 2009-2010 cycle, with the 2012 budget year showing potential strength to again exceed the $17.049 million collected in 2007-2008.
The state refunds to Tupelo 18.5 percent of the sales taxes collected inside the municipality, and keeps the rest.
Tupelo’s tourism tax, 2 percent on lodging, entertainment, and restaurant food and beverages, is well ahead of the 2011 pace through the May report (March collections) of $2.448 million, with four more months of collections in the fiscal year. The city retains 100 percent of the tourism tax, which is dedicated in part to bond retirement on the BancorpSouth Arena and funds the city’s convention and tourism promotions.
The total in 2011 was $3.42 million, well ahead of the $3.23 million collected in 2010.
The spread sheet shows tourism tax collections increased even during the down years of the recession.
The sales tax supporting bond debt payments for the Northeast Mississippi Regional Water Supply District is virtually invisible to consumers but so far has amounted to $1.951 million. Every month so far has shown an increase over the 2011 revenue. The district sells some of its water to other communities.
Nothing guarantees never-ending increases in municipal prosperity. Challenges exposed by the recession and demographic shifts show Tupelo that nothing can be taken for granted, but the news on tax collections offers encouragement.