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Sales tax collections exceeded adjustment

But SPLOST VI still fell victim to the recession

POSTED: September 9, 2013 12:27 a.m.
 

The sixth round of the local 1-cent sales tax program brought in less than the original low-end estimate, but more than the mid-program adjustment, Forsyth County figures show.

Collections from the latest special purpose local option sales tax, known as SPLOST VI, brought in about $142.7 million from July 2008 through June of this year, according to county figures.

In February 2008, nearly 70 percent of voters approved the five-year sales tax, which was projected at the time to bring in between $160 million and $275 million.

By May 2010, the county had dropped its estimate to $132 million in the face of declining revenue caused by the recession.

“Then we beat that,” said David Gruen, county finance director, “but we didn’t make the $160 [million.]”

Of the $142.7 million taken in, the city of Cumming received a little more than $6 million, according to the percent split.

Gruen said the increasing revenue after the county dropped its projections could probably be attributed to economic recovery and continued growth in Forsyth.

“There are more people here shopping and living here and generating sales tax beyond economic activity picking up,” he said. “Growth has really fed a lot of it.

“And then the fact that the spending itself and employment and the economy’s gotten better, that all comes together to increase the sales, and therefore the sales tax.”

Gruen added that inflation could also be helping collections.

However, the increases in the final years of SPLOST VI didn’t make up for the sharp decline in revenue from the previous SPLOST V.

From 2008 to 2009, collections dropped nearly 15 percent, according to Gruen.

In 2010, the upward trend returned, and each year saw an increase of about 5 to 9 percent over the previous year.

The final tally had already been significantly impacted, however, and in May 2010, county departments proposed cuts to their sales tax projects to match the projected 17.5 percent decrease.

The county is obligated to complete every project in the referendum, Gruen said, but some were reduced in scope to match the smaller budget.

County commissioners soon will review a comprehensive list of the projects to determine how to divvy up the remaining unallocated funds, which total between $30 million and $40 million, he said.

Commissioner Brian Tam, who has been in office since 2005, credited staff for adjusting well to the declining collections and keeping the board on track.

“They tried as best they could to get our infrastructure projects completed or started,” Tam said. “We’re fortunate to have that sales tax to use for infrastructure, our public safety, roads, sidewalks, and we’re fortunate that that money [also] comes from citizens outside of the county that come in here and spend money.”

Most of the projects included in SPLOST VI focused on transportation, including road widening, repaving and intersection improvements.

Tam said the decline in revenue mirrored the lowered demand in the county’s housing market.

That trend has since reversed, and the sales tax collections likely are to continue to grow.

“With SPLOST VII, I think we’ll be back on track,” Tam said. “Our anticipated revenue is conservative, and I’m confident we’ll hit that $200 million [projection.]”

Gruen said he used a 3-percent growth model when projecting the total for SPLOST VII: “A modest 1 percent growth, which I think we’re exceeding, and a 2 percent increase for inflation.”

According to Gruen, current projections show $209 million could come in from the current sales tax extension, which voters approved in

November 2011.

About $100 million from the six-year program will fund the construction of the courthouse, jail and associated parking decks in downtown Cumming. Work on those projects began this summer.

“We were very careful, I believe, with our projections,” he said.

 

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