ABERDEEN, S.D. (By Elisa Sand firstname.lastname@example.org) – City officials remain cautiously optimistic with another bump in sales tax receipts, but Aberdeen’s promotion fund is falling behind.
The state’s June sales tax reports have been published, which reflect May sales tax collection and payments.
With the city, state and nation dealing with disruptions in the economy due to the COVID-19 pandemic, one unknown has been revenue and where sales tax revenues will fall, especially in crafting the 2021 budget.
The annual budget is typically planned with the expectation that Aberdeen will see conservative growth in revenues. But early projections speculated a decreases in revenue for 2020. That prompted a delay in purchases and capital projects. While some cities have taken a hit in sales tax revenues, Aberdeen has seen an atypical amount of growth the last three months.
April’s report showed a 20.89% increase, May was up 18.57% and June was up 28.27%.
City Finance Officer Karl Alberts said each of these reports combines the city’s 2% sales tax and its 1% bed, board and booze tax, which is seeing a year-to-date decrease. While the 2% sales tax is split between the general operation of the city and capital projects, the BBB tax is revenue that’s set aside for the city’s promotion fund.
That funding is used to support a variety of agencies including the Aberdeen Area Chamber of Commerce, Aberdeen Downtown Association and the Aberdeen Area Convention & Visitors Bureau.
Alberts said the June report shows the BBB tax was down 33.91% for the month. In that report, the BBB tax is listed as the city’s gross receipts tax. Looking at the first six months, the BBB tax is down 7.68% compared to where BBB tax receipts were in 2019.
And, Alberts said, the 2019 BBB tax was down 9.3% from 2018.
He said the latest sales tax report is encouraging, but he’s not going to bank on 20% to 30% increases each month for the next six months.
While it’s tough to pinpoint exactly where the growth in sales tax is coming from, Alberts said one area that’s seen significant growth is in manufacturing. Those taxable sales have shown a significant spike. The 2019 sales tax reports show taxable sales, with the exception of one month where they were about $226,000, ranged from $2.7 million to $4.65 million.
This year, taxable sales for manufacturing have been much higher — $14.1 million in April, $18.47 million in May and $26.4 million in June.
“There’s a segment in the manufacturing sector that’s grown significantly,” Alberts said.