NA retail sales and tourism tax collections continue rebound

New Albany retail sales tax continues to be above last year’s total and the tourism tax, despite two worrisome months, continues to improve as well.

The retail sales tax dispersed to the city for July was $342,662 and the tourism tax was $79,814

The July retail sales tax is down about $2,500 from June, but still shows an increase from July 2019 amounting to 14.7 percent. Retail sales for each month this year have consistently outperformed the same month a year ago, if sometimes only by a few percent.

April was the worst month for tourism tax receipts because of March closings and businesses not reopening and bouncing back. Each month since then has increased, however, and the July total is well within the typical realm for the period. Since the lower month totals occurred in the current fiscal year for New Albany, they may not have impact on next year’s budget.

City officials feared there would be a considerable tax loss due to the pandemic but were pleased and admitted to some surprise that the amounts did not dip more.

To be safe, the city instituted a spending freeze during this period and was able to save some money because activities were cancelled.

The mayor and aldermen had said they were putting off work on next year’s budget until they saw more tax results, fearing they would have to seriously trim some aspects of the appropriations. Now, that likely will not be necessary, although one official said funding requests, especially for tourism dollars, are up significantly for next year.

Aldermen have not set a date for a public hearing on the proposed budget but will need to have it in final form and approved by October.

The taxes are some of the main sources of funding for city operations.

Merchants collect a seven-percent tax on all retail sales and that money goes to the state. The state returns 18.5 percent of the total sent to the city and keeps the rest.

This past year retail sales brought in about $3.5 million to the city government, representing about $270 million in sales.

The tourism tax is two percent levied on lodging and food that is prepared on site. The city gets to keep all of that and this past year it amounted to about $960,000.

Retail sales tax is statewide and goes into the city’s general fund to be spent on whatever officials want. It is usually spent on necessary government operations. It represents more than half the city’s budget.

The tourism tax is only applied in the city limits and must be used to promote tourism or developing New Albany as a retirement community. It is used more for quality of life purposes and is equal to about one-eighth the city’s budget.