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The article below got me wondering when the Feds and all of the States are going to start taxing Internet sales en masse.  There is no telling how much Temple has lost in the way of sale tax leakage due to Internet sales.  Sales taxes make up 29% of the City revenues. Significant leakage could hinder our ablity to maintain levels of service without offsetting property tax increases. I often ponder the inequities of a government sponsored tax scheme that gives online reatilers a significant advantage over local business that have to collect sales tax. On the other side of the coin, I understand the huge logistical issues associated with collecting sales taxes for 50 states and the Feds. Oh well, this is an issue that we will have to leave up to our infinitely wise elected representatives in Austin and DC to solve.

Amazon.com has now added Rhode Island to its blacklist of affiliates in response to its proposed budget changes to enforce a tax on Internet sales, which includes commissions on their affiliate program by content providers based in Rhode Island. The first state to be blacklisted was North Carolina, for the same reason. If you go to a Rhode Island-based or North Carolina-based website that advertises Amazon.com goods as an affiliate, that website will no longer have the goods available because otherwise Amazon.com would be forced to pay sales tax to the State of Rhode Island and Providence Plantations or the State of North Carolina. The state’s rationale is, if someone clicks to buy a good from Amazon.com via a site based in Rhode Island, it’s equivalent to buying a good from a brick and mortar chain store located in Rhode Island.

Below is the City’s press release concerning the new sales tax numbers.

TEMPLE, TX – February 12, 2009 – Yesterday, the State Comptroller’s Office released sales tax information relative to December, 2008, receipts by the State. The numbers* for Temple, the region and the State are as follows:
- For the State, sales tax was up 2.51%
- For the Temple region, sales tax was down an average of 1.62%**
- For Temple, sales tax was down 3.31%
The current budget projected an annual increase of 3.83% growth in our sales tax.  Based on the current year’s actual reported numbers to date, our sales tax revenue would fall short of budget by 1.82 %, or $570,000.
While sales tax revenue is a significant source of the overall General Fund revenue, it represents approximately 29%, or about $15.8M, of total budgeted General Fund revenue for FY 2008-09. By January, the City has historically received 4 months and approximately 36%, or about $5.7 million, of its total sales tax revenue for the fiscal year.   Historically, sales tax revenue for purchases made in the month of December has contributed 11.5%, or $1.8M, of total sales tax revenue for the year.   December is traditionally the most active month for retail activity and generation of sales tax revenue, but historically it represents only about 3% of total general fund revenues.
“Conservative policies and practices in other areas of the City budget are allowing the City to maintain a favorable outlook for the remainder of this fiscal year,” states City Manager David Blackburn.  “Fuel expenses, for example, are running well below budgeted levels (current estimated savings in these accounts are estimated to be around $900,000) and those savings will help offset other areas where revenues might fall short of projections.”
“Thus,” Blackburn continues, “the City’s overall budget outlook for the remainder of this fiscal year continues to remain stable.”

Click here to see how well the area weathered last December. Overall the entire area did better than I had anticipated. I must admit I was expecting a double digit decline for Temple alone.

For those of you who are interested in how our local retail businesses are weathering the downturn, the following sales tax info might be of interest to you.

The sales tax allocations we receive from the State are directly tied to retail sales in the City.  Our sales tax allocations compared to the same months last year were up +4.7% for the month of September, +.9% for October and down -9.78% for November. The real question is how we did in December. We won’t have those numbers until February 11. So far, our year to date average is a negative -1.13%.  Not a very promising start to our fiscal year.  If this downward trend continues I anticipate some difficult budgetary decisions on the horizon.  The City Manager has assured me that he and the Finance Department are hard at work on financial contingency plans. Brings to mind an old saying I heard back in the 50’s “Pray for the best, prepare for the worst.”

It looks like bowling is as hip as ever according to an article in today’s Wall Street Journal.  It also looks like cities are going to need every bit of sales tax they can generate to make up for dismal retail sales.  So I think it would be safe to say that a new bowling alley would definitely be an economic development project. Maybe we can get the government to offer free bowling lessons as part of the stimulous plan.