The pandemic had an unexpected impact on sales tax collections for the city of Poplar Bluff.
It created the largest increase in five years for the 1% tax that funds general revenue activities, according to figures provided by the city. This account pays for police, fire and street department expenses, among others.
Sales tax collections grew by 6.9% in 2020, over the prior year, said Matt Winters, city manager. That is a growth of just over $365,000, for a total of almost $5.7 million.
“I believe there are several factors related to COVID that caused this actual increase in sales tax revenue,” he explained. “First of all, I think the stimulus checks that were sent out earlier in 2020 had a positive impact on our revenue along with the increased unemployment benefits.
“Secondly, I think that many people did not travel out of town for vacations, leading to people spending more money locally.”
And finally, as Missouri was more “open” than some other neighboring states, Poplar Bluff hosted some baseball and softball tournaments, bringing in visitors to town that were spending money locally, Winters said.
Sales tax growth hasn’t been higher than 3% year-to-year since at least 2016, with figures at: 2016, 1%; 2017, 2%; 2018, 1%; 2019, 3%.
The unusual growth meant fewer cuts were needed to the 2021 budget, Winters said. The city may have had to look at layoffs or reduced services otherwise, he explained.
Poplar Bluff has struggled in recent years to balance the general fund budget, cutting staff and instituting a hiring freeze in 2020.
The city has budgeted for a 3% increase in sales tax this year.
“I do feel that this year’s sales tax increase was an anomaly due to these factors and that we will potentially see a decrease in sales tax revenue as more places around the country, and internationally, ‘open’ back up for visitors,” Winters said, looking ahead in 2021.
The federal government has been considering additional stimulus efforts, which Winters said could ultimately be another boon for the city.
“Depending on what COVID relief package the federal government passes, 2021 could end up being a good year compared to 2019 as well,” he said.
But it isn’t something the city is counting on.
“We are constantly looking for ways to be more efficient in the operations of the city and the services we provide,” Winters said.