Homer Alaska - Business

Story last updated at 10:42 AM on Wednesday, December 14, 2011

City, borough sales tax receipts up

BY Hal Spence
For the Homer News

Homer sales tax revenues are up over last year, according to the latest figures released by the Kenai Peninsula Borough, but the increase may be due more to rising prices, especially for fuel, than an upsurge in sales, said Homer Finance Director Regina Mauras.

"I think people are not necessarily buying more, but they are spending more because everything costs more," making it difficult to say for sure whether buried in the data are signs of modest economic recovery, Mauras cautioned in a Monday interview.

Still, increased spending means more sales tax revenues to the city, and much of the year's spending occurs during the busy summer months. Homer's gross-sales during the busy third quarter of this year topped $129.5 million, a significant jump over the $114.6 million registered in 2010 and the $113.3 million of 2009.

But most crucial to the coffers of city hall are the taxable sales to which Homer's 4.5-percent sales tax applies. (Homer shoppers pay an overall sales tax rate is 7.5 percent, but 3 percent of that goes to the borough.)

During this year's third quarter, local businesses reported nearly $59 million in taxable sales, up more than $3 million over 2010's third quarter and topping 2009's by $4.5 million. That $59 million produced better than $2.65 million in sales tax revenue.

Through three quarters this yea (January through September), total taxable sales stood at nearly $130 million. A good holiday sales season could drive Homer's annual total taxable sales as high as $157.6 million. That's healthy for the city's bank account.

"We are anticipating around $6.9 million in revenues through the end of the year," Mauras said.

Borough-wide, gross sales during the first three quarters of 2011 are up significantly over the same periods of 2010 and 2009. Meanwhile, borough taxable sales have already topped $764 million through three-quarters this year, $347 million of that during the summer third quarter alone. Taxable sales could easily climb above the $903 million registered last year if the holiday season boosts fourth-quarter sales as expected.

Borough Finance Director Craig Chapman said this year's summer season was solid.

"Taxable sales are up 5.5 percent over last year" for July through September, he said, noting that the $347 million was the best calendar year third quarter since the $364 million recorded in the summer of 2008, just before the recession struck. Chapman said this year's third quarter boost could have had something to do with the number of reds returning to the Peninsula rivers.

Whether fuel prices are having a positive effect on revenues is debatable, Chapman said, because gas was as high as $4.50 a gallon back in 2009, but only about $4.20 a gallon today.

Sales in other cities across the borough also appear to be rising on the same tide, though in places the figures are mixed. For instance, Seldovia's gross sales through three quarters are down from last year, as are its third quarter taxable sales.

Soldotna, too, has seen mixed numbers. In 2010, the city's annual gross sales grew by $7 million over 2009 even though the city saw a drop in sales during the fourth quarter. A similar decrease in the fourth quarter of this year could push Soldotna 2011 numbers back to 2009-level gross sales. The city's taxable sales, however, are up so far this year, according to borough figures.

Kenai, meanwhile, showed definite growth. Its taxable sales are up across all three quarters this year compared with those of 2009 and 2010. A healthy fourth quarter could push the city's total taxable sales into the neighborhood of $230 million.

Seward is also having a good year, and a healthy fourth quarter could easily push that city's taxable sales well above the $97 million registered last year. Through three quarters this year, taxable sales in Seward have already reached $89.4 million.

Sales tax data alone provide insufficient evidence to say absolutely that we are emerging from the recession locally, but comparing this year's projected numbers to those of the two prior years suggests there is a modest local rebound going on, Chapman said.