Squeezing the cities | Arkansas Blog

Monday, March 2, 2009

Squeezing the cities

Posted By on Mon, Mar 2, 2009 at 6:04 AM

The D-G this morning examined an issue the local press in NLR had already noted -- the city's declining sales tax revenues. This runs counter to the experience of other cities in Pulaski County and comes despite a variety of recent redevelopments forecast to positively help the city -- such as the taxpayer-financed ballpark and other downtown development.

Mayor Pat Hays surmised that a fairly new state sales tax law -- in which the tax is assessed at the point of delivery of a purchased item rather than at the store where it's purchased -- could be having an impact. NLR is a regional retail hub. So, however, is LR, which has experienced increasing revenues.

Springdale, it turns out, has the same complaint, according to a story in the Morning News today. And Rogers cites an issue that may be still more important -- a provision in the law that allows rebates to businesses of taxes collected on purchases in excess of $2,500. Think electric bills, to name one big purchase. It's a significant amount of money.

The cities generally like the point-of-delivery tax and the Arkansas State Chamber of Commerce wants to extend the rebate program. Together, that sounds like no relief for cities like Springdale, Rogers and NLR.

It's all worth remembering every time a city wants to give away money with infrastructure subsidies and take school property taxes to lure a new business, particularly a retailer with regional appeal. The formula on benefits is far more complicated than typically depicted.

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