Even before COVID impact, county sees sales tax revenue drop

Down 20.7% in past 6 months; commissioner not worried due to $7M reserve

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By Conrad Dudderar

Senior Staff Writer

Even before the impact of businesses closing due to COVID-19 is truly realized, Canadian County has seen a significant overall decline in sales tax revenues in recent months.
Canadian County has had to withstand a 20.7% drop in sales tax collections – totaling more than $955,000 – over the past six months compared to the same six months the previous year, Oklahoma Tax Commission records show.
Between November 2019 and this April, Canadian County had received $3,663,956 in sales tax disbursements from the state. Between November 2018 and April 2019, the county’s sales tax collections totaled $4,619,359.
Canadian County generates revenue from a .035 % sales tax to fund operations and programs at the Gary E. Miller Canadian County Children’s Justice Center.
Canadian County’s sales tax disbursements in the last six months have been: November ($677,664), December ($618,740), January ($448,628), February ($728,766), March ($598,783), and April ($591,375).
“Our monthly need for the budget at the juvenile center is just under $600,000,” Canadian County District 2 Commissioner David Anderson said. “We’ve had no trouble making that. There’ll be a month or two in the year we’ll have to move money over from our reserves to cover the shortfall.
“But we have almost $7 million in reserves so we’re in good financial shape to weather the storm. It’s always been a practice for Canadian County to budget less than what we receive. … The commissioners don’t want to get in a position where we’re having revenue shortfalls.”
The significant jolt that stores closing has on local sales tax revenues will start becoming apparent over the next couple months.
That’s because each month’s distribution of sales tax collections by the Oklahoma Tax Commission primarily represents local tax receipts from business two months earlier.
For example, the May distribution will represent business in March – when many Oklahoma retailers started being forced to close. The June distribution will be the most noticeable, since it represents the month of April after the governor’s emergency disaster order took effect.

YUKON, OKC, EL RENO DOWN
Three of Canadian County’s four largest cities also have seen declines in sales tax income, the six-month analysis of Oklahoma Tax Commission data shows.
The largest cities in Canadian County are Yukon and Oklahoma City.
For the part of Oklahoma City in Canadian County, the decrease has been $3,625,195 (28.7 %) between the last six months and the same months the previous year.
Meanwhile, the City of Yukon has been down just slightly – $29,937, according to tax commission records. Over the past six months, Yukon’s monthly sales tax disbursements have ranged from $1,852,278 and $2,000,939.
City Manager Jim Crosby has estimated sales tax collections will drop between 20 and 40 % due to COVID-19-related business closures.
The City of El Reno – the Canadian County seat – is down more than $3 million in sales tax revenue (38.5 %) in the same six-month comparison. The closing of the Halliburton plant and decline in commerce generated by oil and gas operations are being blamed for the large drop.
Yukon’s neighbor to the south – the City of Mustang – has actually seen a slight increase (about $16,000) in sales tax collections over the past six months.
“El Reno has a pretty large industrial presence – Halliburton, Schlumberger and these different oil and gas manufacturers,” Anderson said. “Where Mustang has none of that.”
A reduction in oil and gas operations has “definitely” affected Canadian County’s tax revenues, the District 2 commissioner noted.
“We’ve done as much as we can to budget conservatively on both the use tax and sales tax,” he said.

USE TAX REVENUES DROP TOO

David Anderson, Canadian County Commissioner.

Canadian County also has seen a significant decline lately in use tax collections.
In the last six months alone, use tax revenue is down 29.1 percent – a drop of $344,310.
Canadian County collected $839,959 from the use tax between November 2019 and this April after collecting $1,184,269 between November 2018 and April 2019.
Canadian County is using use tax revenues for the new fairgrounds/expo center construction project at Jensen and Alfadale roads in El Reno.
“What we’ve tried to do is never get in a position where it would take more than 60 percent of what we expect to receive (from the use tax) to debt service the fairgrounds,” Commissioner Anderson explained.
“Our use tax generated $2 million last year and, once we get our fairgrounds fully built out, our debt service is going to be about $900,000 a year. As long as we’re receiving over about $80,000 a month, we’ll be able to debt service.”
Canadian County’s monthly use tax disbursements have ranged from $118,278 to $166,738 over the past six months.
Use tax is a tax on goods purchased in another state for use in the taxing state, in lieu of local sales tax. Use tax applies to purchases made outside the taxing jurisdiction but used within the state.
The City of Yukon’s use tax collections have increased by $82,797 (7.8 %) over the past six months from the same period the previous year.