Norfolk Daily News

Tuesday – April 8, 2008

Sale tax revenue is starting to trend upward in Norfolk.
Randy Gates, city finance director, told the city council on Monday that sales tax collections have been up five of the last six months compared to similar months a year earlier.

The increase works out to about 7.5 percent over the same period a year ago, he said.

“We hope it’s the beginning of a trend,’’ Mayor Gordon Adams said.

Sales tax for the fiscal year ending last Sept. 30 was budgeted at $6.2 million, essentially unchanged from the 2007 budget.

Through the first six months of fiscal 2008, however, actual sales tax receipts exceeded the budget by $238,000.

The Nebraska Department of Revenue told Gates the increases have been fairly uniformly distributed among businesses in Norfolk.

Gates speculated the increase may be linked to rising crop prices. He cited a recent Wall Street Journal article that described prosperous times in the Albion area as a result of higher prices farmers are receiving for corn and soybeans.

“I guess that might have a lot to do with it,’’ he said.

January sales tax revenue amounted to $500,684 — the highest it has ever been in that month in Norfolk and up from $461,908 last year.

The sales tax has been relatively flat since 2000. Actual receipts from the city’s 1 percent sales tax were $4.02 million in the fiscal year ending Sept. 30, 2000, and $4.2 million ending 2007, only a 5 percent increase spread over seven years.

An additional half-cent sales tax levy authorized by voters in 2002 provided $1 million in property tax relief plus additional funds for public safety.

Sales tax alone makes up almost half of general fund revenues for city coffers.

Actual receipts from the city’s original 1 percent sales tax have been up three of the last seven years and down the other four.

The city’s sales tax growth had traditionally exceeded 4 percent annually. Slow growth in sales tax early this decade is thought to have been due to a general slowdown in the economy.

Total city sales tax still is projected to lag behind the planned 4 percent annual growth rate by a cumulative $6.5 million between 2001 and 2008. It’s a reason the city cut back on some jobs in recent years.