Spending in East Baton Rouge remained high in early 2017, although there are signs post-flood activity has begun to abate.
Sales tax collections for the first four months of the year were up 9.1 percent — from $60.4 million last year to just under $66 million in 2017, according to figures from the city-parish Finance Department.
Consumer and business spending in East Baton Rouge Parish increased by 15.8 percent in Janua…
Finance Director Marsha Hanlon attributes the higher numbers to people still rebounding from last August's flood as they continue to replace vehicles and household furnishings and purchase construction materials. One example of the impact: The city-parish collected 37 percent more in taxes on vehicle sales this January compared to the same month in 2016.
Another factor that might be playing a part in higher sales tax collections is a state law that took effect in January requiring retailers like Amazon to collect and remit sales taxes on purchases of items that are sent to addresses in Louisiana. However, the impact that may be having isn't clear from available data.
The parish does appear to have turned a corner of sorts when it comes to heavy purchases driven by flood victims who have been rebuilding their homes and replacing damaged appliances and furnishings.
Sales tax collections in the first four months of the year were all lower than collections in the last four months of 2016, right after the flood hit.
The effects of the August floods continue to be felt in consumer and business spending in Ea…
Although higher sales tax revenue is flowing into the city-parish’s coffers, local government took a hit on the property tax front, said acting Chief Administrative Officer Jim Llorens. Business taxes, court fees, ticket fees and other sources of revenue have dipped as well, Hanlon added. Llorens expects those losses to balance the temporary sales increase.
"I don't see the need at this point to say we're going to have a surplus. ... We're not looking at this huge surplus yet," Llorens said.
But the city-parish can re-evaluate its position at the end of the year, he added.
The sales tax rate that applies in most of East Baton Rouge Parish is 10 percent. Of that amount, the state takes 5 percent, the city-parish gets 2 percent for general operating purposes and another 1 percent is divided equally to pay for road and sewer improvements. The remainder goes to the schools.
Louisiana's average sale tax remains higher than any other state in the country.
LSU economist Loren Scott prepared a financial outlook for the city-parish last year after the flood as the Metro Council was preparing to finalize the 2017 budget. He predicted a modest 1.5 percent increase in sales taxes overall.
"We wanted to be cautious," he said.
The last thing the parish needs after an emergency is to assume it will take in more revenue than it ends up collecting and have to make cuts or start firing people, Scott said.
Eventually people will stop buying building material and replacing cars, he said. In addition, he said, some flooded businesses were shuttered and that meant lost jobs and people with less money to spend .
"Once you get beyond the bubble, we're not really sure" what spending habits will look like, Scott said.
The bubble began in September, when sales tax collections shot up from $15 million in August to $18.5 million in September as people set to work rebuilding. The parish wound up collecting $195.4 million in taxes last year, a substantial 5.6 percent increase over collections in 2015.
Sales taxes are a major portion of the revenue in the city-parish's $317 million general fund budget for 2017. They are projected at $186 million for 2017 and account for 59 percent of revenue, with property tax revenue the second biggest source at $27 million, or nine percent.
Of course, much of the additional revenue will have to go toward paying for clean-up costs. While the federal government agreed to pay for the lion's share of the work, the city-parish is still on the hook for millions that it spent out of its rainy day fund to pick up debris, replace flooded vehicles and begin fixing public buildings.
The potential impact of another source of additional revenue, from online sales, is unclear at this juncture.
The city-parish parish government and other public bodies in Louisiana began this year collecting sale tax revenue from major online-only retailers.
The sales tax records of individual companies like online-only retail giant Amazon are confidential so it's impossible to know how much they are paying.
Amazon.com, the giant online retailer, will begin charging Louisiana customers sales taxes o…
Prior to January, online retailers were not collecting and remitting taxes on sales made and shipped to Louisiana residents.