When it comes to Orem’s three-month sales tax revenues, city leaders are satisfied with a best out of three result.
“Well, our sales taxes for this month (May) didn’t turn out like we had been led to believe they might be, but (they’re) still not in the terrible category either,” said Brandon C. Nelson, city finance director.
The state released the May sales tax revenues Tuesday and over the first three months of the COVID-19 pandemic, Orem didn’t fare so bad.
“March and April were super at any time, but were super phenomenal considering the situation,” Nelson said.
Nelson released a month-to-month comparison between fiscal year 2019 vs. fiscal year 2020. The sales tax numbers look like this.
- March 2019 = $1,996,134 vs. March 2020 = $2,129,635 (6.7% increase)
- April 2019 = $1,686,163 vs. April 2020 = $1,791,705 (6.3% increase)
- May 2019 = $1,970,872 vs. May 2020 = $1,933,953 (1.9% decrease)
The three-month total = $5,653,169 in 2019 vs. $5,855,293 in 2020 or a 3.6% increase.
Nelson said that two months ago, before the first three months of COVID-19 numbers were available, the city was prepared to see between a 20% and 40% decrease in sales tax revenues.
May’s 1.9% decrease coupled with the other two months has Orem looking “so far, so good”, according to Nelson.
Why these numbers are so different than expected is surprising but could be due to a number of factors.
“I don’t really have much in the way of answers other than perhaps stimulus checks, tax refunds, huge grocery store purchases, car sales (incentives?), and home improvement purchases,” Nelson said.
Orem never could have expected a run on toilet paper, hand sanitizer or water to keep city coffers in the black when it comes to sales tax. Nelson also said car dealerships were offering pretty hefty incentives. Those include 0% interest on new cars, pushing back first payments for as far into the future as January of 2021.
Why May showed a decrease could be just on the timeliness of reporting and paying of the sales tax to the state.
“For May, it appears several of our larger sales tax payers were not included in the distribution which means they must have held their payment until later in the month while they paid earlier in the month in the prior year,” Nelson said. “Distribution cutoff is around the 20th of the month.”
Nelson has not had time to do a complete analysis of what areas provided the most sales tax revenues, but that will come.
For now, Nelson hopes the sales tax revenues will continue to keep city coffers filled. What appears to be the unknown is if there will be another stimulus package, if businesses will stay afloat, if more jobs will be found or lost and just how flat the COVID-19 curve will become. All of these could have an effect on sales tax revenue.
On the other hand, there is still summer home improvement projects to buy for, back-to-school shopping, Halloween purchases coming and, yes, by mid-September the Christmas goods will be starting to fill the shelves. How all that sales tax revenue will look by the last quarter of the year is what Nelson is waiting for.