Sales taxes rebound strongly

CELINA - Sales tax collections in Mercer County dropped precipitously during the early months of the COVID-19 pandemic but then abruptly changed course in a remarkable turnaround, county auditor Randy Grapner said.

"It absolutely has something to do with unemployment," he asserted. "We have people employed. People are making money. They are also spending money. Our local folks wanted to get back to work."

The amount of general fund sales tax revenue reported each month reflects spending from about two months earlier. March's collections realized in May were largely positive.

"We had a 7.04% increase over 2019, which in terms of dollars was $178,000," Grapner noted. "We come into June - April's stats - we lost $88,000 (from April 2019) - a 19.87% reduction over the prior year so that dropped us down to $89,000 (over last year)."

Such a staggering drop, however, is understandable given much of Ohio was locked down under state orders, choking the free flow of commerce.

May's sales tax collections realized in July suffered a 5.16% dip from May 2019, not nearly as pronounced as in the month before. Grapner said at that point he thought the county would be able to get by should the rising trend continue.

And then June's sales tax figures were posted in August, showing a remarkable rebound.

"All of a sudden we come in with a 13.82% increase (over June 2019)," Grapner enthused. "We're back up to $149,000 (or) 3.7% over 2019. This was what was happening as we went back to work."

Grapner points to the county's unemployment numbers as a barometer of economic health.

Mercer County had maintained the lowest unemployment rate in the state since March 2016. That coveted status was usurped when pandemic-caused job losses sent Mercer County on a free fall from the state's lowest unemployment rate to 14th in a three-way tie with Clermont and Fairfield counties.

Mercer County's unemployment rate soared from 3.5% in March to 14% in April, according to the Ohio Department of Job and Family Services.

A resilient labor force was able to march its way back. Mercer County's unemployment rate in July improved its standing from eighth-lowest to third-lowest unemployment rate in the state.

The rate dropped from 7.9% in June to 5.7% in July, according to the Ohio Department of Job and Family Services.

Rather than sit on their hands and fret about tomorrow, the county's workers and entrepreneurs rolled up their sleeves and got back to creating as soon as possible, county economic development director Jared Ebbing said.  

"And just like after the Great Recession, guess what county came out of that better than any other county? Mercer County," Ebbing said. "Why would this time around be different?"

People continued to live their lives in the face of a pandemic and regardless of setbacks had expected to make certain purchases in 2020, Ebbing continued.

"You're still going to go out and spend that money unless you completely and forever lost your job - and some have, obviously," Ebbing said. "I think for the vast majority of people … if you were intending to buy a new car in 2020 you're going to buy a new car in 2020."

Grapner agreed about people living their lives and proceeding with purchases, pointing to a local marina that had gone through its entire stock of personal watercraft, used boats and new boats.

"Bike shops are the same way," Ebbing added.

Optimism is a powerful economic tool and at the end of day, people have confidence in the area and its future, Ebbing said.

"They believe in our people. They believe in our companies. They believe in this area so they're going to have optimism and they're going to spend their money," Ebbing said. "Even if it was a bad March, April, May, they're still looking to go out and do things and spend money because they have optimism in the area."

The two men were not privy to a specific breakdown of sales categories, including online commerce. Grapner said sales taxes are collected by the state and sent back to county coffers.

Some people unemployed during the pandemic were still able to spend because of federal assistance, Ebbing said.

"Those people who did go on unemployment for a period of time were supplemented by a lot of federal stimulus … additional unemployment," he said.

The general fund sales tax collection is the county's biggest revenue stream, constituting about 43% of its budget.

Grapner's cautious optimism of sales tax trends is somewhat tempered by his overall outlook on the county's general fund revenue streams, such as investment returns, which he said will undoubtedly take a hit because of the pandemic.

"The investment side is going to be reduced. We'll miss that mark," he said. "We had a (general fund) carryover that we could sustain. We're not in bad shape, but we're definitely going to suffer some losses. At this point, without going into severe austerity measures, we are just asking all departments to tighten their belts, watch the spending."

Mercer County's sales tax revenue had gone through the roof in 2019, setting a record for the ninth consecutive year. Total sales tax revenue in Mercer County for 2019 was $9.07 million.

Mercer County's aggregate sales tax rate is 1.5%; 1% goes directly into the general fund while 0.5% is used each year to maintain and pay down the debt on the adult detention center/sheriff's office, west of Celina. The combined state and county sales tax rate is 7.25%.