Sales tax receipts so far for 2018 on goods and services purchased in Hays are up only slightly over 2017, according to Kim Rupp, finance director for the City of Hays.
Right now, receipts are up only seven-tenths of 1 percent, after showing decline the first five months of the year, and then increasing slightly in June, July and August.
“It’s been down January through May, then it started a little recovery over the summer,” Rupp said. “Currently it’s been flat or a little above.”
Sales tax receipts supply money for public works, streets, parks, police, administration, municipal court, the fire department, the golf course, city swimming pools and the baseball fields, among other things.
“Basically it’s what runs the city,” Rupp said, referring to the city’s general fund. Sales tax revenue represents about two-thirds of the general fund for the city of Hays. Unlike most cities, Hays doesn’t have ad valorem, or property taxes, in the general fund.
The remaining third comes from franchise fees, liquor licenses, building permits, court fines, golf course revenue, pet permits and interest income.
City administrators closely monitor sales tax receipts, Rupp said, making adjustments to the budget as needed. He’ll present the latest figures to the Hays City Commission on Thursday evening during its regular meeting at 6:30 p.m. at City Hall, 1507 Main St.
“Obviously we’re going to always keep an eye on it,” he said. “We have room in the budget to absorb some shock. If we dip a percentage or two it’s not bells and alarms.”
Sales tax receipts reported for any given month actually represent the sales tax generated two months prior, said Rupp.
“There’s a two-month lag, so January is the collections received in November the prior year — so Black Friday. February is Christmastime,” he said.
January 2018 receipts were down 6.99 percent from the year before. February’s were down 5.69 percent.
City administrators haven’t been able to pinpoint any one thing causing the change in tax receipts, but they do speculate on what might be the cause.
“We still think oil has something to do with it,” Rupp said. “Ellis County is the number one county in the state for oil production. So if the price is down, that’s pretty big for us.”
At the same time, Internet shopping may have something to do with it. For example, the city gets sales tax from items purchased on Amazon, which represents thousands of sellers, if the individual seller has any kind of brick or mortar presence in Kansas, including salespeople or delivery infrastructure. If they don’t, the buyer doesn’t pay sales tax.
“We do get a pretty good chunk of sales tax from Amazon,” Rupp said. Also, the city may be losing sales tax to Salina and Garden City, from Hays residents who shop in those cities.
For 2019, city budget-makers are projecting sales tax receipts will be flat.
Sales tax receipts in 2017 totaled $7.1 million, which was lower than the previous three years. In 2014, they were $7.39 million, then rose slightly to $7.43 million in 2015, then dipped to $7.18 million in 2016.
He said so far the city has been able to work with the ups and downs, making adjustments to continue funding necessary reserves, as well as finding raises for city workers.
“We’ve worked hard to tow the line,” Rupp said. “Everybody is doing more for less. It takes everything.”