With all of the business closures across the State, many Jones residents have been concerned about the impact of COVID-19 on our local economy. While some city leaders had projected catastrophic declines in sales and use tax, bracing citizens for a 5-year recovery, it seems that the numbers haven’t been as bad as originally anticipated.
When looking at a month-to-month comparison of only Sales Tax, it’s easy to see why some have been so concerned. At first glance, we see that the April 2020 sales tax check came in at $58,863.13, which was $33,393.60 or 36.2% below the prior year. Now before you start to panic, let’s take a closer look at these numbers. The April 2019 sales tax check for Jones was the highest on record, receiving $92,256.73. However, digging into the industry data, we see that NAICS Code Sector 53 for Real Estate and Rental and Leasing had a $19,605.49 bump in April 2019. While public records do not disclose the specific reason for this increase, it’s pretty obvious by looking at prior months and years that this extra $20k in revenue was a one-time anomaly. Factoring out this one-time payment, revenues for the April 2019 check fall more inline the monthly averages and by comparison, make the April 2020 check look a little less scary, setting Jones back $13,788 or 19% from the prior year.
While these numbers are not great, the actual reason for the April decline is unknown. You may want to speculate that this is our first glimpse of COVID-19 closures hitting our town’s sales tax revenues, but the reality is the April Sales Tax numbers don’t show that. The April Sales Tax check reflects collections for the last half of February actuals and first half of March estimates. Since Governor Stitt made his Executive Order to close businesses on March 24, 2020, the sales tax impact from business closures did not start appearing until the May 2020 check. Unfortunately this means that Jones sales tax revenues were already in decline prior to COVID-19.
The May sales tax check (reflecting purchases made during the end of March, first of April) does show some decline that can be attributed directly toward COVID-19, with a decrease in sales tax of 12% or $9,267.07 compared to the prior year. However, sales tax alone does not accurately reflect our consumer shopping, and Use Tax showed a significant increase in May 2020 of 32.9% or $4,945.41 above last year.
While sales tax is the bread-and-butter for municipalities in the State of Oklahoma, the increase in online sales has dramatically improved the Use Tax numbers for our community. With COVID-19 restrictions, many residents have turned to online shopping and delivery services to meet their needs, and the Use Tax is helping to make up the difference in retail sales. Because of the unique situation with COVID-19 encouraging shoppers to stay home, it seemed appropriate to talk through the Sales and Use Tax numbers as a combined figure to give you a more complete picture of local revenues.
The really great news in all of this is that year-to-date combined Sales and Use Tax for Jones are at $909,254 for the months July-May in FY 2020 , which is only a 1.5% or $13,905 decline over this same period last year. Comparing it to the same months in FY 2018, Sales & Use Tax numbers are actually 17.5% above revenues from two years prior, boasting a $135,245 increase. With only one month of collections remaining in the current fiscal year, it looks like the community will be slightly below the annual budgeted revenues of $1,019,800, with a current year-to-date budgeted revenue deficit of $25,562,40 or 2.7%.
Overall, as we keep continue looking at these numbers, we are reminded that this could have been so much worse. Neighboring community Luther, is facing a 25.8% dip in year-to-date sales tax collections, compared to only a 6% decrease for year-to-date sales tax in Jones. With larger cities like Oklahoma City announcing 11.25% budget cuts, the Jones 2.7% revenue shortfall seems oddly comforting. Cuts in the Town of Jones municipal budget will be inevitable as we move into the next fiscal year, but hopefully this will not result in a huge loss of services for our citizens. The June Sales Tax check will give us a clearer picture of the town’s revenues and the actual impact of COVID-19, and the Jones Board of Trustees will soon be sharing their budget for FY 2021. We will keep you updated as we learn more.
In the meantime, keep shopping local as much as you can. Order your groceries online and have them delivered to your home (inside Jones City Limits). Continue eating takeout at one of our great local establishments. Switch your prescriptions to the local pharmacy. Before you make an online purchase, ask yourself if you can buy this same product somewhere in town. The great part about living in a small town is that even a small change on our part can make a huge impact for our community.