County remains cautious amid positive tax revenue numbers, potential for more federal funding
SALISBURY — Greg Edds has reason to be optimistic, but the Rowan County Board of Commissioners chairman is says he’s staying skeptical about positive tax revenue numbers.
“There’s no one more surprised than we are, and we’re still a little pessimistic,” Edds said.
As the months have rolled on during the pandemic, commissioners have been bracing for the impact that COVID-19 was expected to have on the county’s sales and property tax collections. Thus far, no negative effects have appeared. The county’s cumulative sales tax revenue from the start of the fiscal year in July through December was $15.5 million, a $1.5 million increase from the year prior.
“We thought sales tax was going to be lower. If we’re $1.5 million above, we thought we’d be $1.5 million below,” said Finance Director Jim Howden.
The increase in sales tax revenue, Howden said, could be a result of the way the pandemic changed people’s spending habits.
“Some of my assumption, right or wrong, is that people didn’t travel,” Howden said. “If you had to stay home or felt like you needed to stay home, that $1,000 where you were going to take the family down to Florida or out to the coast, people spent it here. You did yard work or you stayed home and purchased stuff on Amazon.”
E-commerce sales soared to new heights in 2020. And thanks to the court decision in South Dakota v. Wayfair in 2018, the taxes from those remote sales come back to local states and municipalities. Online shopping could be one reason the county saw an even greater bump in sales tax revenue during the holiday season.
“I have to believe that at Christmas time, people were buying with Amazon,” Howden said. “I think it’s related to people instead of going to see grandpa and grandma up in Michigan, and spending 600 or 700 bucks to get there, we’ll just spend that on Christmas gifts and stay home. That’s just my thought.”
Through January, the county’s cumulative property tax revenue of $81.7 million was also up slightly from the previous year.
Despite the positive numbers, Edds said that he thinks the county will continue to be cautious with its spending. The county is in the early stages of developing a budget for the 2021 fiscal year.
“We’ve been propped up by two or three federal stimulus packages, and so what role do those play in continuing the economic consistency in our county? We don’t know the answer to that,” Edds said.
Through three federal stimulus bills, the federal government has now paid hundreds of billions of dollars in direct payments to American citizens. The most recent round of stimulus checks are currently being distributed to eligible recipients.
Even with more money on the way to people’s pockets, Howden said that he can’t imagine the county’s sales tax revenue will continue to increase like it has.
“At some point, it’s going to flatten off, especially when we start getting these stimulus checks,” Howden said. “At some point, when more people get back to work and are doing that stuff and traveling, that money is going to be spent in other places. But, man, no one really seems to know that I’ve talked to.”
In addition to sales and property tax revenues being up, the county’s overall cumulative revenue has been much higher than in recent years. Through the end of February, the county’s annual cumulative revenue was $120.7 million. That’s an almost $6 million increase from the previous year when revenue was at $114.8 million. Howden said that the reason why revenue is so high is because of money the county received from the federal government for COVID-19 relief.
Rowan County is in line to get even more funding from the federal government through the recently passed American Rescue Plan. Counties are slated to receive $65.1 billion in population-adjusted payments and Rowan County is projected to receive $27.56 million.
That’s a sharp increase from the $5.3 million Rowan County received from the CARES Act. Howden said that he isn’t counting the money until more details emerge.
“The one thing we would have to understand, truly if we receive that much money, what can and can it not be spent on and what’s our time frame and go from there,” Howden said.
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