Humboldt County Comptroller Gina Rackley provided a brief explanation of the Consolidated Tax Distribution (CTX) before presenting the yearly fiscal overview to the Humboldt County Commission on Aug. 21. CTX provides the largest portion of Humboldt County’s overall revenue, but the amount of CTX revenue received by the county each year has steadily declined since fiscal year 2013-2014.
CTX is composed of six different tax types combined by the state.
Other sources of revenue include real property taxes (29 percent), taxes on net proceeds from minerals (7 percent) and personal property taxes (6 percent).
Each tax type in CTX includes distribution formulas that depend on certain criteria. For instance, cigarette and liquor taxes are distributed to counties based on population rather than the county’s actual cigarette and liquor sales. Government services tax, which applies to vehicle registration, returns to the county of origin.
The Basic City-County Relief Tax is determined as a percentage of the overall sales tax for the state. It is distributed to the county where the business is located, unless the business is out of state. In that case, the money is distributed to counties based on population. Distribution of Supplemental City-County Relief Tax depends on a series of county designations stipulated by statute.
Distribution of CTX gets incredibly complicated, and depends on multiple factors – some of which haven’t changed since 1997, when CTX originated.
Fiscal year 2012-2013 was Humboldt County’s peak year for CTX revenue with just under $15M. That amount has steadily declined year after year since then. Considering current financial information, CTX revenue for Fiscal Year 2016-2017 is down over $1.5M compared to 2015-2016, and down $6M compared to the peak year, a nearly 44 percent drop.
The current fiscal year numbers are not complete, however. At the time of publication, Rackley had not received the CTX information for June.
One reason for the decline in CTX revenue has to do with online shopping, Rackley said. While making purchases through websites can be convenient, the sites might not include sales tax as part of the purchase. Closing that loophole would require federal action.
Another reason raised during the meeting is that mining companies are not making large purchases (heavy equipment, for example) that would include sales tax in the county. “When the mines hold back, people can buy whatever they want at the grocery store; it’s not going to make up for that haul pack,” Rackley said.
While CTX revenue from large industrial purchases has declined, revenue from small, local businesses has increased.
In general, the months that have produced the largest CTX revenues have coincided with summer travel. However, months like July that usually see significant revenue returns from travel have not done so lately. Rackley echoed the commission’s concern that the county hasn’t yet seen the “bottom” of the downward trend.
