COVID-19 offers uncertain future for city sales tax

Poplar Bluff city leaders are unsure of where the COVID-19 outbreak will leave their finances when it comes to the sales tax that funds police, fire and other city operations.

The full impact won’t be known until at least June, when the city receives sales tax collections for April, according to city manager Mark Massingham.

The city experienced a decrease in sales tax for the first two months of the year, before COVID-19 shuttered many businesses and restaurants.

Massingham earlier this month said he expected the March and April collections to be some of the two worst months in years.

But March numbers offered a surprise. Sales tax collections were up a little over 10%, Massingham said Friday. While states across the nation fear large budget shortfalls because of the lockdowns that kept people home and out of restaurants and stores, the city, for March at least, had a different experience.

“I will say that of the top 10 retailers in the city, none of those businesses closed,” Massingham said in early May, while briefing city council members on January and February numbers.

The top 10 sales tax collectors in 2018, the most recent year available, were: Walmart Supercenter, 19.58%; Menards, 6.96%; Neighborhood Market, 5.22%; Kroger, 4.9%; Home Depot, 4.27%; Aldi, 2.17%; 10Box Cost Plus, 1.95%; Gamblin Lumber Company, 1.88%; Hefner Furniture, 1.53%; New Cingular AT&T, 1.47%.

“I’ll just say I’m cautiously optimistic it may not be as bad as we thought,” Massingham said at the time.

The city expects to collect more than $11 million in sales tax in 2020, split among its general fund, capital improvement fund, park department and economic development fund.

Poplar Bluff budgeted for a 3% increase in sales tax collections in 2020, under a budget that is currently expected to be about $300,000 in the red.

Sales tax collections for the first two months of the year were down a total of approximately 2% from the previous year, according to Massingham.

Cities have been concerned they would be in a similar position as states across the nation.

The Associated Press reported this week many states expect their revenue to plunge by 15% to 20% because government-ordered lockdowns have wiped out much of the economy and caused tax collections to evaporate. The state fiscal year begins in January.

Lawmakers in Missouri adopted a budget in May that counts on more federal aid. If it fails to come through, aid to state universities would be cut 10%.

The Center on Budget and Policy Priorities, a nonpartisan but generally left-leaning think tank, projects a cumulative budget gap of $650 billion for state governments through the next two fiscal years.

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Associated Press reports contributed to this article.