Counties throughout the area collected more in sales tax revenue in 2012 than the previous year, and the outlook for 2013 is also positive as consumers cautiously emerge from the recession and boost the region’s economy through increased spending.
Sales tax collections are a closely watched barometer of the health of the retail sector, which accounts for about two-thirds of the U.S. economy. The increased consumer spending is also good news for county governments trying to offset losses in state revenues and in property tax collections.
Montgomery, Greene, Miami, Warren, Butler, Clark and Champaign counties all recorded increases in sales tax revenue during 2012, according to the Ohio Department of Taxation. The seven-county area’s overall increase in collections reached a tidy 5 percent, although that performance lagged the state’s 88 counties as a whole, which saw their sales tax revenues rise 7.2 percent to nearly $1.6 billion.
The collections for December were disbursed by the state to the counties in late March, offering the first full picture of calendar year 2012.
“It is a sign that the economy is starting to pick up,” said Butler County Commissioner Don Dixon, whose county saw a 6 percent increase to $32.6 million in 2012.
John Parks, budget and financial planning manager for the Montgomery County Office of Management and Budget, agreed. “We feel more confident that the economy is rebounding, and people are starting to spend,” Parks said. “It’s a very positive thing that the sales tax rebounded so quickly.”
A “Think Twice” campaign by the Montgomery County Community & Economic Development Department — designed to increase consumer loyalty to local businesses — may have had a positive impact, Parks said. Until late 2012, Montgomery County enjoyed a 30-month streak of year-over-year increases in their monthly sales tax collections.
Greene County Auditor David Graham said county officials are pleased with the 2.8 percent increase in sales tax collections in 2012, although collections in the latter half of the year dropped slightly compared to 2011 after a robust gain in the first half of the year.
The county saw a string of 29 consecutive months of year-over-year increases in sales tax collections came to a halt in late 2012. Greene County officials realize that the commercial development that fuels sales-tax collections will reach a plateau soon, which will limit future revenue increases in sales tax collections, Graham said.
Dixon said after a slow start last year, Butler County’s sales tax revenue picked up considerably and the county has continued to see higher sales tax payments in the past few months.
“The fundamentals appear to be that Butler County is in the right position to continue the growth pattern that it has had in the past,” Dixon said. “The extra sales tax has been earmarked to pay down debt. The good news is (sales tax revenue) is headed up, and hopefully, it will continue to do that.”
Butler County is waiting for an expected boost in sales tax collections from the planned mixed retail, entertainment, dining and housing development Liberty Town Square. Construction on the multi-million development by Steiner + Associates has been delayed and is yet to start. It would be built in Liberty Twp. near Liberty Way and I-75.
If the project moves forward, Steiner’s estimates are that once open, Liberty Town Square would generate $1.5 million in new annual sales tax revenues for Butler County.
Warren County Commissioner Pat South said while the Premium Outlet Mall, other retail centers and car dealers contribute significantly to the sales tax take, the most important factor is the county’s biggest business: tourism. South said a report by the state’s department of travel and tourism shows that 60 percent of the county’s sales tax is paid by people who don’t live there.
“The sales tax makes up almost 50 percent of our general fund,” South said. “So it’s not important, it is critical.”
County officials throughout Ohio have said they’re dealing with reductions in revenues from the state from cuts in the Local Government Fund and a phaseout of tangible personal property taxes; a drop in property tax collections because of foreclosures and the recession; and reduced interest income from investments because of anemic interest rates. Sales taxes are an important component of county revenues, but their growth has not made up for losses in other areas, county officials say.
Graham said he and county officials throughout the state are closely watching the Ohio General Assembly, where legislators are considering a proposal from Gov. John Kasich to expand the sales tax to include many more services that are currently exempt from the tax. The proposal would cap the increases that any such expansion might bring to the counties, and the list of services covered has not been finalized, making the final impact on county governments uncertain, Graham said.
• Staff Writers Lauren Pack, Chelsey Levingston and Denise Callahan contributed to this report.
Sales Tax collections 2011 to 2012 — see Excel attachment.