Sales taxes point to revenue shift

Ozark City Administrator Collin Quigley said Ozark’s increase in sales tax revenues – from $1.43 million in 2003 to $1.71 million last year – is due in large part to two commercial areas.

“We saw several new businesses open up in 2004, in several new commercial areas,” Quigley said. “65 Marketplace is continuing to grow, and the south part of town – the new Ozark Center with the new Wal-Mart Supercenter – is continuing to attract new businesses there.”

Springfield also saw continued growth. Year-to-date sales tax revenue is up more than 5 percent from 2003 – from $29.4 million to $31 million. Finance Director Mary Mannix-Decker said the city’s growth is encouraging, especially considering the increased retail opportunities in outlying communities.

“I think Springfield is still the major economic center of the region, but I believe there has been some growth in the outlying areas, mainly in the groceries and the Wal-Marts that are coming up in Republic and Ozark and Nixa,” she said. “People aren’t forced to come to Springfield as often as before for things they need.”

Republic experienced a 9.2 percent increase, to $1.17 million in 2004. City Administrator Dean Thompson said he expects another similar increase this year.

“We have a new hotel and two new restaurants opening (in 2005),” he said. “Then if Lowe’s builds, we could see 20 percent.”

Nixa also saw continued growth in its sales tax revenues. However, City Administrator Brian Bingle said the growth is not as strong as it has been in past years.

“There’s a steady decline in the sales tax history in the city,” Bingle said. “We’ve hit a plateau of 3 percent growth over the previous year, and that’s what we’ve budgeted for 2005. However, history would suggest that we will probably see a decrease over the 2004 year, unless there is significant retail activity in addition to what we already have.”

Bingle said he’s surprised that the Springfield numbers aren’t better than they are.

“This is what’s really confusing to me,” he said. “Springfield’s experiencing the same thing. You’d think that all of this growth in the surrounding area – where the product isn’t available in Nixa, Ozark, Republic, Strafford, Rogersville – that all this growth we’re experiencing residentially should be going to Springfield, because that’s where the product is at.”

Nixa’s sales tax revenue grew from $1.71 million in 2003 to $1.77 million in 2004.

Bingle added that Nixa is in the process of hiring a consultant to advise the city on how to attract new businesses so the town’s residents won’t have to leave as often to do their shopping.

The future

Quigley said Ozark’s future looks bright, based on residential construction and commercial business activity. “We see the trend continuing for several years in terms of the growth and availability of land,” he said.

Quigley added that the town currently has another commercial development under way on Highway 14, as well as between 2,000 and 3,000 subdivision plots available for residential growth.

Some Springfield officials, however, are worried about the city’s dependence on sales tax money. Several City Council members, including Mayor Tom Carlson, have expressed concern about the large percentage of city revenue that comes from sales taxes. Mannix-Decker said she also worries about the city’s lack of revenue diversity. Sales tax revenues made up nearly 62 percent of Springfield’s $58.2 million 2002–2003 fiscal year revenues.

“I think in a perfect world we’d all like to have a more diversified revenue base, but that’s the more perfect world,” she said. “It’s hard to get there. I think it would be to Springfield’s advantage to diversify our revenue sources, and at the same time I think it’ll be difficult for us to achieve that.”

Online shopping is believed to be affecting sales tax revenues for all municipalities in southwest Missouri and across the country.

ComScore Networks, which studies consumer behavior globally, reports that online spending reached $66.5 billion in 2004, a 26 percent increase over 2003. Additionally, six of the top 15 online retail properties posting gains over the 2004 holiday season were the online storefronts of traditional offline department stores, including retail giants Wal-Mart, Home Depot and Neiman Marcus.

And the online shopping trend is not likely to stop any time soon. In a study published Jan. 3 by Goldman, Sachs & Co., Harris Interactive and Nielsen/NetRatings, 37 percent of all online shoppers were “very satisfied” with their online purchasing experience, while another 24 percent labeled themselves “somewhat satisfied” with the experience.