The sales tax collections that Augusta depends on for capital projects, operations, school construction and, soon, transportation projects were down nearly 5 percent in February over last year.
According to a news release from the city, local option sales tax collections were down in February by 4.9 percent over 2012.
The reduction amounts to about $142,000 less in monthly tax collections, while similar reductions took place in collections of Augusta-Richmond County’s three other 1 percent sales taxes – the special purpose local option sales tax, the education local option sales tax and the new transportation sales tax, according to Deputy Finance Director Tim Schroer.
City officials had little explanation for the drop, which is based on what state revenue officials reported was to be reimbursed to the city.
“We watch it monthly, but before we make any major adjustments, I would want to go through and get March and April’s information,” Schroer said.
Mayor Deke Copenhaver said he expected to continue to see decreases as the Legislature tweaks state sales tax laws.
“There have been several significant changes made to sales tax law by the state Legislature in the past year. Because of those changes, we are expecting to see decreases in our collection rates,” Copenhaver said.
One of those changes, the replacement of sales taxes on automobiles with ad valorem taxes, started in March, so its impact won’t be seen until the March report comes out.
The state’s elimination of a sales tax on energy used in manufacturing – to be phased in over four years – probably accounts for about $40,000 less in monthly collections since it started in January, Schroer said.
Columbia County recently chose to enact an excise tax on its manufacturers to replace the sales taxes lost to the energy exemption, but the Augusta Commission chose not to do that.
Augusta’s year-to-date local option sales tax collections are down $326,000, and its special purpose local
option sales tax collections are down $300,000, Schroer said.
City Administrator Fred Russell said the lower collections might reflect community fears of cutbacks in an area dependent on federal government jobs.
“I think, generally speaking, we have a community that’s scared of sequestration,” Russell said. “I think people are being more cautious in their expenses.”
The report revived thoughts that shoppers are buying local in Aiken or Columbia counties instead of in Augusta.
“As retail grows around us, we’re not the only place to shop in town, either,” he said.
For more than a year, the Augusta Commission has toyed with the idea of hiring a specialist to focus on retail development. On Tuesday, the commission authorized Russell to meet with Development Authority of Richmond County Director Walter Sprouse to develop a plan that focuses its staff or a consultant on retail growth.
Despite the drop, Copenhaver said he trusts those in charge of the budget.
“This is just one of the challenges that we face, but I have the utmost confidence in our management and finance team to continue to make Augusta a great place to live, work and play,” the mayor said.