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Sales tax revenue remains high, but county officials expect decrease

SALISBURY — Despite seeing surprisingly high rates of sales tax revenue generated at the end of fiscal year 2019-20, Rowan County officials are wary of what the future holds.

During her final financial report before retirement last month, former Rowan County Finance Director Leslie Heidrick delivered an unexpectedly rosy picture of sales tax revenue for the county in May.

Instead of declining as many predicted due to COVID-19, sales tax revenue in May was actually up 19% from the year prior, totaling $2,584,115.

“We expected a drop off in sales tax receipts due to COVID-19 beginning in April,” Heidrick said. “As this chart shows, so far it has not materialized, which is excellent news for the county. We’re going to have a very good year for fiscal year 2020 for sales tax receipts.”

That trend continued in June when Rowan County received $2,580,570 in sales tax revenue, down only slightly from May.

“Even though we were flat to May, it was still a pleasant surprise that it did not dip and go lower,” Rowan County Finance Director Jim Howden said. “We were thinking we could be on the decline 10-20% with sales tax and at least through June, we did not see that.”

Tourism Development Authority Director James Meacham said that June’s high sales tax revenue could largely be attributed to government support, among other factors.

“June had a big surge of money from the CARES Act, money from unemployment insurance, so you had a real surge of money coming in,” Meacham said. “There might have been pent up sales and purchasing demands for household products that helped drive June higher.”

The slight decrease from May to June marked a strong close to the 2019-20 fiscal year for Rowan County.

“We can say last year is a good year,” Heidrick said. “We don’t know what fiscal year 2021 will bring, but we did budget significantly less in fiscal year 2021 than we did in fiscal year 2020.”

Meacham said that “the real question” is what will happen now that many of the additional benefits from the government have run out or decreased.

“Now that those benefits have expired, what will the sales look like in the preceding months?” Meacham asked. “That’s a question we don’t really have the answer to until we start getting the sales tax numbers.”

In its 2020-21 budget, Rowan County accounted for a 9.5% reduction in sales tax income. Rowan County Board of Commissioners Chairman Greg Edds said that while the sales tax numbers have been promising, he and the other commissioners are still expecting the reduction they budgeted for.

“If you’re making some educated projections, you have to believe that sales tax revenues are going to go down,” Edds said. “That’s what informed our decisions to put capital projects on hold.”

Since it takes several months for sales tax revenue to be collected, analyzed and released, Meacham said that it might not be clear until the beginning of calendar year 2021 how the tax revenue fluctuated in the late summer and fall.

In the meantime, Edds said that commissioners and county staff will continue to watch the numbers as they become available.

“As monthly numbers roll out, we look at each other and wonder when it’s going to change,” Edds said. “We could sit here a year from now and find out it hasn’t but I still don’t think anyone believes that.”

Howden said that he is expecting sales tax revenues from July to be released within the coming days and that Rowan County’s revenue will probably be “down a bit.”

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