Inflation continues to drive up sales tax revenue in northwest Arkansas’ four largest cities, which reported a 16.75% increase from a year earlier in their August data. Combined revenues reported in August totaled $9.216 million, a monthly record for the region in August.
In the year-to-date through August report, the four cities reported total revenue of $77.664 million, up 30.6% from the same period a year ago.
Bentonville, Fayetteville, Springdale and Rogers reported double-digit increases over the same month last year. The August revenue comes from 1% of the local sales tax each city collects on goods and services in June. The U.S. Commerce Department reported that consumer prices rose 9.1% in June, the largest increase in 40 years. The following month the CPI improved to an 8.5% gain over the previous year.
Marvin Jebraz, director of the Center for Business and Economic Research at the University of Arkansas, said inflation is part of revenue growth, but continued population growth and pent-up demand from consumers spending accumulated savings during the pandemic. .
Fayetteville reported revenue of $2.529 million for the month, up 18.15%. The city has added more than $19.473 million to its fund so far in 2022, a 10.7% year-over-year increase. Devin Howland, director of economic development in Fayetteville, recently said the city’s growth is expected to reach 151,000 people in 2045. Fayetteville’s population is also bolstered by the student population of the University of Arkansas which has seen a 5.4% increase in student numbers. Admission last year.
Bentonville reported August revenue of $2.184 million, up 17.6% from the same month last year. For the first eight months of reports, Bentonville collected sales tax revenue of $15.87 million, up 13.68% year over year. Bentonville Mayor Stephanie Orman told Talk Business & Politics that the city is on track to meet budgeted revenue for the year.
“Our sales tax amount, which only makes up about 50% of our revenue, is currently exceeding budgeted revenue at this point in the year,” Orman said. “We have been fortunate in Bentonville with long-term steady growth in key areas of population, employment and growth. The question we now face is how long this momentum of growth in these three key economic areas will last. Each city has its own unique opportunities and challenges, and work for one What works may not work for another.
Orman also said economic growth presents challenges to city management.
“Our first concern now is the pace of inflation and its impact on capital infrastructure projects and the services we provide. A combination of workforce shortages, supply chain challenges and unprecedented inflation are driving up the cost of providing city services to a growing population,” Orman said.
Springdale saw a whopping 17.15% in reported revenue in August to around $2.042 million. Mayor Doug Sprouse said the city’s finances are in good shape thanks to stronger-than-expected revenue and lower expenses due to more open space. He said it’s a struggle for the city to keep wages high enough to offset record inflation.
“We’re now putting together next year’s budget, and we have a conservative outlook given the recession most economists predict in 2023. We’ll probably budget for a sales tax revenue gain of between 6% and 8%, which we should be able to accomplish even in a slowdown,” Patti said. / said the wife.
Through the August report, Springdale’s sales tax revenue totaled nearly $14.849 million, up 19.34% from a year ago. The city budgeted less than half of that benefit.
Rogers is also on track for another record year of sales tax revenue, posting a gain of 14.29% in the August report with revenue of approximately $2.461 million. In the first eight months of this year, Rogers’ sales tax revenue totaled $15.870 million, up 13.68% from a year ago.
Mayor Greg Hines said the city has strong reserves left over from the pandemic years when the city cut back on spending. Hines said that when it comes to next year’s budget, city officials will try and make sure worker wages offset some of the cost-of-living increase. The city raised the cost of living for all city workers earlier this year. He said that apart from salary increase, the budget expenditure will be very less.
“We hear a recovery is coming, and it’s necessary, but we don’t know when or how long it might last. We’re in a recessionary climate at the moment. We’ll never spend all of our budget revenue, but we’ll need our workforce and resources to keep up with population growth. We will spend the appropriate amount on other necessary improvements,” Hines said.
He said that despite the environment of high interest rates, the city has not slowed down in its big development plans. He said the city’s entertainment venues are busy with consumers attending shows at the Walmart AMP and downtown’s new Railyard venue.
“I wouldn’t say we’re recession proof, but coming out of a two-year pandemic and even though it’s expensive to do so, there’s still huge pent-up demand from consumers,” Hines said.
Jebraj expressed confidence that the economy will slow down next year, but said the sector is very resilient to inflationary pressures seen this summer.
“If there is a slowdown, it is expected to be short and somewhat shallow, but some of that will depend on how moderate fuel prices are in the coming months,” he said.