Is the city of Hot Springs' record-setting sales tax growth a function of increased consumer spending or the state law requiring internet retailers and e-commerce facilitators to collect and remit state and local sales taxes?
The July sales tax report the city released Wednesday suggested it was the former, as the $1,558,587 the city's 1% general fund sales tax collected exceeded July 2019 collections by 25.67%. The law extending state and local taxing authority to online commerce took effect in July 2019.
Wednesday's report provided one of the first sales tax comparisons to a pre-pandemic month with the expanded tax base. The city's January and February reports corresponded to a 2020 period prior to the pandemic, but a winter storm affected February collections. Many businesses closed during the storm, contributing to a 6.34% drop in collections compared to February 2020.
July collections exceeded 2020 by $199,903, or 14.71%, putting the first seven months of collections $1,441,907, or 17.11%, ahead of last year's pace. The tax collected a record $14,960,641 last year and is on pace to generate more than $17 million in 2021.
The utilities agreement the city and Garland County ratified earlier this year is expected to increase city revenues. The city agreed to lift restrictions on connections and extensions in the unincorporated area in exchange for a per capita share of county sales tax growth.
Growth exceeding 3.6% of the county's 2020 collections will be shared on a population basis, meaning 2021 county sales tax revenue exceeding an $11.1 million threshold will be shared with the city on a population basis determined by the 2020 census.
The $9,868,874 the city's 1% sales tax collected through July has outperformed the 2021 budget's revenue forecast by $1,211,979, or 14%.
July collections of the 3% sales tax the Hot Springs Advertising and Promotion Commission levies on prepared food and lodging in the city were up $172,657, or 24.48%, compared to the previous July, according to a report the ad commission provided Wednesday. The $4,848,363 the tax collected through July surpassed the first seven months of last year by $1,402,643, or 40.70%.
The Hot Springs Metropolitan Statistical Area's jobs recovery continued in August, but at a slower pace than the previous four months. According to the U.S. Bureau of Labor Statistics preliminary jobs report, the area economy had 900 more jobs than in August 2020.
Job growth slowed in August relative to the previous four months, when the area economy gained an average of 1,685 jobs a month from April to July. The five straight months of job growth followed 12 straight months of losses from April 2020 to March. The area economy lost 2,325 jobs a month on average during the yearlong decline.
Job numbers are getting closer to pre-pandemic levels. The BLS reported 38,400 jobs in August. The agency reported 39,000 or more jobs for 15-consecutive months from January 2019 to March 2020. The job market crashed the following month, losing 6,800 jobs compared to April 2019.