GROVE - While it seems that the federal government will ease some financial pressure on small businesses and individuals, the future may be bleak for funding city and county government services.
According to State Treasurer Randy McDaniel for the past six months before the shutdown the state sales tax collections were down by 3.4 percent, while gross production taxes on oil and natural gas are off by almost 20 percent.
Governmental budgets, including city and county services, are very dependent on sales tax collections.
When a retail purchase is made in Delaware County, there is a state and county sales tax of 5.9 percent added to the cost of the purchase. The state sales tax is 4.5 percent. The Delaware County sales tax rate is 1.4 percent. If the retail store is located within the city limits of Grove an additional 3.4 percent sales tax is added to the price. If the purchase is made in Jay, the sales tax added is 3 percent.
Oklahoma is one of a few states in which cities are so reliant on sales tax collections. Property taxes fund school districts not city services.
Small businesses make up more than 80 percent of the total business base in the United States. It is certainly a large share of businesses in Delaware County.
As those businesses have been ordered to close, they will impact governmental income and their ability to serve their communities. However, some businesses are seeing major increases in sales. Hardware and building material companies have seen as much as a doubling of sales and people are home and catching up on do-it-yourself projects. Grocery stores are also having a major increase in business.
At the same time, the loss of sales tax revenues from a wide variety of small businesses is bound to have a long-term impact. County and local governments receive sales taxes from the state because businesses rebate the total sales taxes collected to the state. The rebates are delivered to city and county governments about two months after they are collected.
That means the city and county governments will not begin to feel the change in sales tax collections until May and the full impacts in the summer months. The city and county budget-year begins on July 1 and runs through June 30, 2021.
Therefore, county and city services will not be impacted significantly until July 1. Planning for the next year’s budget has begun and it is difficult to plan on what sales tax revenues may be for the upcoming fiscal year,
In Grove, the total income for the general fund of the city is about $6.4 million. Sales taxes make up $4.1 million of that total. In addition, another $400,000 comes from the use tax, which is the tax charged on online sales and on materials bought outside the city but used in the city.
Grove also has a 5 percent lodging tax which motels and hotels collect. The tax is used to fund the Grove Convention and Tourism budget. The loss of tourism revenue from last year’s flood and now the shutdown of many visitor-friendly events will directly impact the work of that agency.
Grove City Manager Bill Keefer says next year’s city budget “will be conservative.” He also said the increase in online shopping may “help get us through.”
The county uses its sales tax revenue to fund specific programs. The county receives about $5.2 million in sales tax and about another $525,000 from use taxes according to County Treasurer Susan Duncan. The county’s 21 fire districts depend on that funding with .004 percent of the tax divided among those districts.
Another .004 percent of the sales tax collections fund the county’s solid waste program and .005 percent are used to pay a legal judgment.