New Albany sales tax continues rebound from pandemic

New Albany continues to do much better than was feared in terms of the coronavirus pandemic’s effect on sales tax revenue.

Retail sales tax revenue for June was $349,050, up more than 12 percent from the same month a year ago and up more than eight percent from May this year.

The city’s special tourism tax revenue for June was $74,181, which actually is pretty close to average for the month.

“We were pleasantly surprised,” New Albany Mayor Tim Kent said. “When I saw the total for that first month (April tourism tax revenue) I thought, ‘Oh, no, we’re in trouble.’”

Kent added that extra grocery and home improvement sales helped push up the retail sales tax, and revenue might have been even higher if some of the smaller local businesses had not suffered from pandemic-related closings and reduced traffic that offset large-store gains.

While the tourism total for June is actually down about 10 percent from a year ago, it happens that the June 2019 amount was something of an aberration.

Occasionally the Mississippi Department of Revenue will report an unusually high number for a month that “catches up” on funds that might have been left out earlier. That appears to at least partially have been the case for June a year ago.

Perhaps more important is that the tourism tax revenue for June is up more than 14 percent from May, continuing a positive trend.

The total for the first month of the pandemic when restaurants were mostly closed was down, 30 percent lower than for the previous year. The following month, however, the total was only down about 15 percent from the previous year as establishments began to recover using carry-out and curbside service.

In fact, because the Department of Revenue records totals from July1 one year through June 30 of the next, the city will have collected more than $68,000 above their previous year, despite lower April and May totals.

Since the lower month totals occurred in the current fiscal year for New Albany, they may not have impact on next year’s budget. Mayor Kent said city officials are beginning work on the budget now that they have some reference points concerning revenue.

It may also help that the city imposed a spending freeze on non-essential items and some budgeted money was not spend due to pandemic-related cancellations and closings.

Retail sales tax and tourism tax are two of the city’s main sources of revenue.

The retail sales tax is a statewide tax, most of which goes to the state. Merchants charge a seven-percent sales tax on everything they sell and that money goes to the revenue department, which returns 18.5 percent to the city.

The tourism tax is a special local tax, all of which returns to New Albany. It is an added two-percent tax charged for lodging, amusements and any food that is prepared on site, as opposed to prepackaged.

The retail sales tax revenue goes into the general city budget and can be used for anything. The tourism tax revenue, can only be used for things that do promote tourism or the city as a senior retirement community.

Sales tax is more important in that it is primarily used for necessary city functions. The tourism tax is used for valuable functions that improve quality of life but may not be deemed essential enough to use regular sales tax for. Tourism tax helps the Union County Heritage Museum, Magnolia Civic Center, tennis complex, New Albany Main Street Association and a variety of festivals and community events.

Retail sales tax revenue accounts for slightly more than half the entire city general $7 million budget. Tourism tax brings in about $900,000 for the year, or about one-fourth the amount retail sales tax brings.