Sales tax collections go up, but so do cost of goods

Collections for sales tax for the City of Marlow are on an upward trend in the last two years, with about $35,000 more as a weighted average per month for 2022 compared to 2021.

And looking at January 2023, that trend continues on an upward trajectory path.

“January is our highest ever (for sales tax collections) at $216,146.92, with the previous highest month ever in August 2019 at $214,000 and some change,” said City Administrator Jason McPherson. “The main reason for that month (Aug. 2019) was we had an $80,000 deal that tied back to Wilco.”

This month’s big sales tax collection is partially credited to Blue Arc, which has a direct impact on the current numbers being produced, McPherson noted.

“The previous couple of months Blue Arc averaged about $45,000 a month in sales tax, the way their trucking works those become sales tax events at Marlow.” McPherson said it shows how important a manufacturing sector can be to a community, especially one the size of Marlow.

While the City of Marlow deals with everything on a fiscal year calendar, McPherson is also tracking by calendar year which is oftentimes easier for the general public to understand. Sales tax totals change on a monthly basis and are never the same or comparable to the previous year.

“Sales tax is a fickle beast.”

Collections for 2021 calendar year totaled $1,624,435.45, with a weighted average per month of $135,603.79; and were up for 2022, as a monthly average $170,516.19.

A breakdown of sales tax numbers begin includes knowing the percentage: General fund is 2 percent, Sanitary & Sewer which is now referred to as Tax Receipt Capital Projects (TRCP) brings in 1 cent sales tax that was renewed in 2015 and began 2017, and is a 25-year tax good through Sept. 30, 2042; Emergency Medical Services gets a half-cent sales tax going back to 1995, yet took effect in 1997, and is a non-expiring tax to fund an ambulance.

McPherson said that 3.5 percent of the sales tax goes to the city, 4.5 percent to state, and 0.7 to the county which is for senior citizens centers, nutrition centers and funding 13 fire departments of which Marlow is included.

“COVID changed the world for sales tax - the shutdown affected everybody – when you were told to stay home, you shopped local and smaller communities like Marlow were helped, but larger communities were pinched,” McPherson said, providing many examples.

“We actually went up in sales tax during COVID – which began in March 2020. We were in the middle of budget process for FY21 that month. I’m slashing numbers and going to department heads and saying, what can we not do and still provide services to our citizens (during that time period). We probably cut about 20 percent, well, technically 12 percent total across the board and then sales tax went up. It helped us in the long run become more fiscally responsible.”

As businesses began opening up and people could begin moving around, driving, etc., sales tax collections went down and now inflation hits, he said. Yet, in 2022, those collections were up as noted earlier in the story to around $170,000 per month averaged out for the year.

“Sales tax is up, things cost more. The strength of a community comes from the private investment. These business owners stick their neck out to run a business and provide for the community, as well as for themselves. That’s a big step for people. Big box stores are not horrible. Family Dollar and Dollar General are great partners. But when you need those to fill the gaps, but you need the private investment support.”

That private investment credit goes to businesses like Marlow Food Market, J&E Metal and Marlow Food Market.

“We have two Love’s stores, the 13th Love store that opened was here in Marlow. They are our top sales tax (earners), along with Sonic, and Marlow Food Market,” he said, again crediting Blue Arc for the increase in tax collections. “A business like Blue Arc manufacturing can be an aid to retail in your community.”

Another bonus is that the city collects sales tax on electricity by law and usage was at an all-time high during the summer of 2022. “J&E Metal has a business that is not everywhere in southwest Oklahoma, so you have people come in from outside Marlow to work with them. Then you have Marlow Lumber Company, one of the oldest businesses – they get all-time highs during COVID – because everyone was home and fixing homes,” McPherson said.

McPherson said there are two modes of business, the City for general fund, and the Marlow Municipal Authority which is required by state law to run utilities within the city.

“We’re fortunate to be one of 62 cities in Oklahoma that still have their own electric system, which is huge, because the electric system sends money to the general fund. Sales tax goes into general fund and then budgeted out by departments. None of that goes to the utility – the city side includes fire department, police department, library, animal control, street department.”

The funding generates money for everything from the purchase of a new police car every year to a tanker truck for the fire department, to an electric digger truck which costs around $350,000 and could take up to five years to be delivered, because of the chain and supply-demand issues facing all of America. Pre-COVID and the shutdown of America, such a truck order might have taken 12 months. So, while there’s the benefit of increased sales tax collections, there’s also the drawback of not being able to get equipment when needed and also the city pays more, just as a consumer would. McPherson said one of the police cars needs a $4,000 part that will be purchased because it’s crucial to keep maintaining services to the residents of Marlow. A utility pole may have cost $6,000 pre-pandemic, whereas now that same pole, same material is going to cost the city anywhere from $25,000 to $40,000.

Back to McPherson’s comment about sales tax being a fickle beast, he said, “Oklahoma is the only state in the union – that cities and municipalities don’t get a part of the property tax, so it’s a critical part of our general fund and makes our utilities all that more important.”