Monday, December 19, 2016

Local sales taxes up in big cities, but varies widely Up North

With the calendar year ending, that also means the end of the fiscal year for Wisconsin's local governments. With that in mind, I was thinking about one of those governments' revenue sources that can double as an indicator of the economy in a certain area- local sales tax revenues.

Most (although not all) Wisconsin counties have a 0.5% sales tax to supplement property taxes and state shared aids/revenues as the most common sources to fund their operations. And therefore, a bump in sales taxes can avoid an increase in property taxes, or it can cushion the blow from lower aids from the state. Likewise, a drop in sales tax revenues require other taxes to pick up the slack, or they require service cuts and deferred maintenance on things such as roads.

With that in mind, I took a look at the state's listing of county sales tax revenues. These funds are distributed from the state with a two-month lag (October's taxes are sent out in December, for example), to make sure the figures are accurate for the time period listed. It appears that the December distributions to counties haven't been posted yet, so I decided to look at the January-November totals from 2016, and compare it for the first 11 months of 2014 and 2015 to get an accurate picture.

Overall, county sales tax distributions looked good through November- they were up $10.3 million (3.3%) compared to 2015 and nearly $18 million compared to 2014 (5.9%). And perhaps not surprisingly, the largest gainers in county sales taxes (and by proxy, increases in state sales taxes) were the state's two largest (and most Democratic) counties. Two others in the top 5 were counties in South Central Wisconsin that border Illinois, who has a higher sales tax than Wisconsin.

Largest gains in county sales tax revs, 2015 vs 2016
Milwaukee Co. $2,301,925
Dane County $1,958,516
Rock County $856,126
Marathon Co. $665,300
Walworth Co. $521,465

Interestingly, four of the largest GOP-voting counties for 2016 in Wisconsin (Waukesha, Winnebago, Outagamie and Brown) are among the 10 who don't have a sales tax in 2016. I'm not sure what that signifies or why these areas feel they can make it without a need for a sales tax, but they'd better hope sprawl continues to allow them to add to their property tax and population base.

But I digress. What's also noteworthy is that there has been a wide variance among counties in their changes in sales tax revenue in recent years. Compared to 2014, 1/6 of Wisconsin's 72 counties have seen double-digit increases, and the top 5 are in the northeastern quarter of the state.

I'll note that most of the northern Wisconsin counties on this list have had stagnant job growth at best over the last 2 years, so it's a good bet much of this is tourist/retiree spending.

On the flip side, there are parts of Wisconsin that have seen drops in the amount of local sales taxes collected, indicating tough times for both the economy and local tourism. Many of these are located in the western half of the state, and the biggest drops have been in counties that once were the home of large-scale manufacturing, but has now fallen on hard times with declining populations.

Wood County's drop in sales tax revenue is especially shocking, down by more than $1.28 million compared to 2014, helping explain a 6.8% increase in the Wood County property tax rate on this year's bills. Even worse, neighboring Portage County has seen its sales taxes rise by 13.3% over the last 2 years.

I also wonder what effect the floods of this Summer have had on Douglas, Ashland, Jackson and Buffalo Counties, as all 4 of those counties had increases in sales tax revenue in 2015, but have dropped below their 2014 AND 2015 levels for this year. Douglas County has especially suffered so far, with a loss of over $500,000 in sales taxes compared to last year. Bayfield County also nearly made this last chart, with their sales taxes being down more than 3% this year, and only up 0.85% compared to 2014. This seems to indicate that getting state and federal aid to these areas to rebuild the damaged infrastructure from the storms is all the more vital, and may not be able to wait through this year's budget deliberations.

Lastly, for those of you who are inclined to direct your tourism dollars to places based on who they vote for, I'll note that the northern counties which have seen the largest increases in county sales taxes have slanted hard toward the Republicans who don't seem to care much about protecting the beautiful scenery or improving the rural schools of that part of the state - the anti-environment and school voucher-supported Tom Tiffany is the State Senator for many of those counties. So far that attitude of voting against hasn't bitten those places in the ass when it comes to getting the tourism spending that allows it to thrive, and I wonder if in the Trump rera, some start to draw that connection....or force those places to take a hit for backing such regressive idiocy.

As for the places that are suffering the losses in sales tax revenue, I'll note that Ashland, Bayfield and Douglas Counties all voted for Hillary Clinton and Russ Feingold, while Jackson and Buffalo Counties were among the "Obama/Trump" counties in the state. Wood County went for Trump by more than 19% over Clinton, and Rusk County voted more than 2-to-1 for Drumpf over Hillary. If you're making your 2017 plans around this time, I suppose that might be a consideration.

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