Humboldt County has the largest decrease in taxable sales in the state for March 2015 compared to March 2014. March is the latest month for which statistics are available. Taxable sales in the county dropped 54.5 percent March 2015 compared to March of 2014. However, that has less to do with overall taxable sales and more to do with specific sales tax coming from huge occasional purchases in one industry sector.
“We look at all the factors when we see a sizable drop like this over one month,” said City Manager/Engineer Steve West, who has been looking at local sales tax comparisons for 30 years.
“Because of the timing of large equipment purchases by the mines, our one-month sales tax comparisons from one year to the next can jump all over the place,” he said. “You can’t just focus on the month-by-month comparisons, or even the year-to-date comparisons. Comparing the Entire last 12-months is a better way to track what’s happening with sales tax revenues.”
West and County Administrator Dave Mendiola said that a nine-month comparison of July 2014 through March 2015 shows both the city and county’s share of sales tax revenues down about 22 percent from those same nine months last year.
West pointed out that last fiscal year (FY 2013-2014), the March sales tax statistics jumped up 133 percent over the year before (2012-2013), which he said puts this March’s drop of 54.5 percent more into perspective. It would be unusual to maintain that large increase two years in a row.
“We knew we’d be down this month compared to the same month last year because last March was so high,” West said.
Even so, Humboldt County Treasurer Gina Rackley said she’s finding plenty to be concerned about each month as tax revenue totals come from the state. Although she agreed that the high of $1.9 million in taxable sales in March of FY 2013-2014 represented an unusual situation not likely to be repeated often, she took the time to compare this year’s March taxable sales ($800,000) to March taxable sales for several past years and found she had to go back five years to find a March as low as the one this spring.
“We’ve been on a great run,” Rackley said, speaking of the multiple-years the mining industry has led the county’s taxable sales figures. However, she said a situation where one has to go back five years to find the last time a month’s revenue was this low is not a good situation.
“The county’s expenses are certainly not where they were five years ago,” she commented.
Mendiola took the comparisons out further and found that the average of the first nine months over the past seven fiscal years shows a drop of three percent. The danger in that scenario is that the increases caused by inflation in all areas and increases in salaries and benefits are far ahead of the revenue coming in.
Looking at the detail reports for where the largest drop has come, shows the drop in taxable sales hasn’t actually come from the mining industry itself — but from the companies that support mining, which are showing much lower taxable sales.
“I’m guessing this sector represents the drilling companies, contractors, rental and leasing companies and others that support the mining industry,” Rackley observed. The taxable sales in that sector last year totaled $53 million, this year, the total is about a tenth of that at $518,000.
“If you take support for mining out of the overall totals, the rest of the business and sales sectors look pretty stable,” said Rackley.
City and county officials meet quarterly with representatives of the mines in the area, and those industry representatives try to give local government a heads-up as to the activity and employment they project for their companies.
“We use the information they share with us to help make our economic projections as close as possible,” West said.
Projections of lower taxable sales and net proceeds of mines taxes — all meaning lower revenue to city, county, school district and hospital district —have been a major factor in decisions each entity made as the final budgets went in to the state last month.
