Vermillion’s drop in sales tax revenue topic of discussion at city council meeting

Vermillion City Manager John Prescott took time during Monday's meeting of the Vermillion City Council to add additional information to an article published in the Yankton Press & Dakotan last week.

"The Press & Dakotan had an article which noted that Vermillion's sales tax receipts were down $3.1 million, or roughly 4.6 percent in 2009 in comparison to 2008, and I guess I just want to make a couple clarifications on that," he said. "To arrive at that number, they added together the first and second penny (sales tax) as well as the Bed, Board and Booze sales tax. And it's also important to note that the 2008 sales tax receipts (in Vermillion) were very strong. If we look at 2008 versus 2007, there is a 15 percent increase in receipts in 2008 when we compare that to 2007."

The Press & Dakotan, on Jan. 27, noted that Yankton was one of only three large South Dakota communities to enjoy an increase in sales tax revenue during 2009.

Yankton had $7.4 million in sales tax due to it in 2009, which was a 1.58 percent increase over 2008, according to a report from the South Dakota Department of Revenue and Regulation.

Aberdeen saw a revenue increase of 2.11 percent, and Pierre experienced a 4.01 percent uptick.

One of the best comparisons that can be made, he said, using city sales tax figures, is to compare the 2009 sales tax receipts in Vermillion with the 2009 budget approved by the Vermillion City Council.

"When we looked at that, the budgeted sales tax receipts for 2009 versus our actual sales tax collections – there is a difference of roughly $70,000 for both the first penny as well as the second penny (sales tax)," Prescott said. "Between reducing some budget expenditures in 2009 and some other changes that we had, we were able to complete 2009 without using any of our budgeted reserves."

The Press & Dakotan noted last week that Vermillion's sales tax numbers were not as high in 2009 as they were in 2008.

"But we were able to complete the year without having to dip into our reserves, which, from a staff standpoint and working with the budget that the council has approved, we feel pretty good about that, in what was a very challenging year," Prescott said. "The department heads were great help as we identified some things that maybe we could hold off on (purchasing), or maybe some expenditures that we didn't need to make.

"We monitored that throughout the year, and would see how those (sales tax) numbers would change, or perhaps not meet expectations," he said. "We appreciate everyone's help in meeting that goal (of not tapping into reserves)."

Vermillion certainly wasn't the only South Dakota city to experience a downturn in its sales tax receipts.

In terms of 2009 sales tax revenue, Sioux Falls was down 2.28 percent. Mitchell experienced a 2.75 percent drop. Brookings had the biggest loss among the state's largest cities with a 6 percent downswing.

Yankton officials adjusted the city budget in mid-2009 when it became clear that budget projections of a 3 percent increase in revenue would not materialize. The strong sales tax numbers in that city are credited, in part, to the hundreds of workers on the TransCanada Keystone Pipeline who were living in the area. They contributed to a 10 percent increase in sales tax revenues for July in Yankton over the same month in 2008.

Yankton's revenue came in above projections through the summer before dropping to the 2-3 percent range by the end of the year.

The 2009 sales tax revenues of other area communities were:
• $34,900 in Gayville, down 13.4 percent from 2008;
• $95,800 in Irene, up 3.3 percent from 2008;
• $141,800 in Lake Andes, up .24 percent from 2008;
• $13,900 in Lesterville, up 10.6 percent from 2008;
• $172,000 in Menno, down 4.2 percent from 2008;
• $304,400 in Scotland, down 24.6 percent from 2008;
• $170,500 in Springfield, down 4.2 percent from 2008;
• $58,800 in Tabor, down 12.6 percent from 2008;
• $234,300 in Tyndall, up .24 percent from 2008;
• $4,400 in Volin, down 75.8 percent from 2008;
• $610,800 in Wagner, up 2.2 percent from 2008; and
• $26,900 in Wakonda, down 3.4 percent from 2008.

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