Thursday, June 21, 2018

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Eau Claire County sales tax riding high

Expert: Collections sign of robust, diverse local economy

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  • Kemp-Thomas-010116

    Thomas Kemp

    Contributed photo

  • Pagonis-Stella-031817

    Stella Pagonis

    Contributed photo

  • Schauf-Kathryn-050115-1

    Kathryn Schauf

    Contributed photo

Shoppers bought plenty of products in Eau Claire County last year, resulting in the highest county sales tax collections in recent history.

County sales taxes for 2017 totaled $10,525,839, more than $400,000 over the 2016 figure and $925,839 more than the $9.6 million county officials budgeted for last year, according to figures provided by the county.

The year marks the third in a row in which sales taxes in the county have topped $10 million, a sign of general strength of the local economy, said Thomas Kemp, chairman of the UW-Eau Claire economics department.

“To me, that number suggests the local economy is strong,” Kemp said of the county sales tax total. “It also may show that we are growing as a regional retail hub.”

Measuring the economic performance of a region is complicated and is based on numerous factors, Kemp said. But any way you look at it, the higher sales tax figure “is a good thing,” he said.

“This is indicative of Eau Claire’s relatively diverse economy,” he said. “It shows we are able to have a wide variety of businesses that attract a wide variety of consumers.”

Sales tax collections this year above what was budgeted continue a trend of recent years, according to county statistics. For instance, in 2016 sales tax revenues totaled $10.1 million, $821,277 more than projected.

The difference was even larger the previous year, when collections were $10.06 million, $1.11 more above the estimate. The surplus in 2014 was $991,013.

Stella Pagonis, a county supervisor and a county Finance and Budget Committee member, said county sales taxes allow the county to fund projects that would otherwise be difficult to find money for. State-imposed revenue limits don’t allow counties and other local governments to raise taxes above a set limit, and sales tax dollars help fill the gap between needs and available funding, she said.

Sales tax collections are undesignated money and go into the general fund portion of the budget, which is used to pay for a variety of county programs. “It is undesignated, but we rely on the income,” Pagonis said.

Sales tax money is spent on one-time costs, County Administrator Kathryn Schauf said. Dollars in the general fund can serve as a safety net for spending shortfalls in county programming, she said.

“The sales tax being strong is a benefit for our budget,” she said, noting those funds will help projects in this year’s budget such as Department of Human Services remodeling and building a sixth courtroom.

Sales tax totals often are above estimates in part by design, Schauf said. County officials are conservative when setting that figure each year, an attempt to avoid a budget shortfall, she said.

“Sales tax collections can be volatile, and that can be a problem with them as a funding source,” she said. “So we are conservative when we budget that.”

Contact: 715-830-5911,julian.emerson@ecpc.com


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