As expected, Jackson, Madison and Ridgeland have all seen sales tax revenues fall this spring as a result of the coronavirus pandemic.
However, drops appear to be far less than expected, and city officials in all three municipalities say they will be able to absorb the losses.
The capital city’s diversions for the month of May were $314,000 lower than the same month last year, while revenues for the cities of Ridgeland and Madison were short $132,000 and $43,000 respectively. Sales tax diversions are the amounts municipalities receive from the traditional seven-percent state sales tax. The state receives all sales tax dollars generated in a city, and diverts 18.5 percent of that back to the municipality.
Overall, Jackson’s sales tax revenues year to date are about $1.1 million short of last year’s take, while revenues in Ridgeland are off by about $100,000 on the year. Meanwhile, Madison’s sales tax revenues have grown by about $270,000 compared with the same time in 2019.
Jackson Mayor Chokwe Antar Lumumba said the city likely will be able to absorb the cuts, thanks to proceeds from the Siemens settlement.
About $12.6 million of settlement funds will be used to repay the city’s general fund. Jackson had previously used those dollars to shore up its water/sewer enterprise fund, which nearly went bankrupt two years ago.
“The losses won’t be as significant because of that,” Lumumba said. “But we’re like every city in the country. We have to figure out how we manage it.”
Jackson brought in $2,011,436 in sales tax diversions for the month of May. Last May, diversions to the city totaled $2,325,959.
May’s diversions are based on sales tax collections from the month of April. Almost all businesses in the state, excluding those deemed essential, were shut down that month.
Overall, tax revenues on the year total $24,644,739, compared with $25,731,460 through the same period in 2019, Mississippi Department of Revenue figures show.
Jackson’s special levies are also down. The city receives funds from three special tax collections: a tourism tax, a convention center tax and a one-percent infrastructure sales tax.
May collections from the convention center sales tax total $220,550, down from $416,614 for the same month last year.
Total convention center revenues on the year are $3,841,259, down from $4,267,289 last year, DOR statistics show.
The tax is placed on restaurants and hotels in the city. Funds generated by the assessment go toward retiring the millions in bonds issued to build the convention center.
Jackson’s tourism tax collections also fell, with $191,366 coming in for the month of May, compared to $332,314 for the same month in 2019. Receipts from that tax fund Visit Jackson, the city’s tourism agency.
Total collections on the year are $3,044,928, about $265,000 less the amount generated during the same period last year.
The city’s one-percent infrastructure revenues are slightly up.
So far this year, the assessment has generated $12,947,603, compared to $12,825,214 for the same period in 2019. However, for the month of May, revenues were down about $65,000, with $1,034,169 being collected.
Decreases come on what was already a tight budget year for the city.
This year, Jackson had to absorb a significant increase in medical insurance costs.
The city is fortunate because ad valorem revenues for the current year are up compared to 2019, Lumumba said.
“A good portion of our revenue comes from ad valorem, not so much retail,” he said, “and that helps stem some of the bleeding as well.”
Ridgeland brought in $927,140 in sales tax revenues in May, compared with $1,055,796 last year. Overall, tax revenues for the year total $12,014,078, down from $12,212,264 for last year.
Mayor Gene McGee said department heads have cut costs where possible, but the city has not yet had to dip into its reserve fund. Ridgeland has a $16 million reserve, which is about 67 percent of its general fund budget.
“Our written policy is to have 45 percent of our general fund in reserves. The reason we do that is because of situations like this,” he said. “If need be, we could utilize some of that.”
McGee said while cutting costs, the city has not reduced services. Ridgeland also has relaxed some restrictions to help stimulate economic recovery. Among rules, Ridgeland is not requiring businesses to apply for permits to put up banners.
Many businesses are putting up temporary banners to inform patrons of new hours, curbside service, and the like.
Madison’s sales tax revenues are up on the year but were down for May. That month, revenues for the city were $680,789, compared with $723,570 for May 2020.
On the year, though, sales tax revenues for the city are about $270,000 up, with $8,398,364 being brought in, compared to the $8,129,399 for the same period in 2019.
While the city is doing well now, Madison Mayor Mary Hawkins Butler said she understands what many municipal leaders are going through.
Butler was first elected mayor in 1981, long before the city’s population and business boom. At the time, the city was bringing in just a few thousand dollars a month in sales tax revenues.
She offered this advice to city leaders facing declines in revenues now: “I understand the struggle. Keep the faith and keep building. Never give up.”
