Sales Tax Revenue Down

How much money a county collects in sales taxes is one of the bigger indicators of the health of an economy.
In Hernando County, the collection rate is headed downward, due primarily to a worsening job market and the collapsed housing industry. The state imposes a 6 percent sales tax on goods purchased, excluding food and medicines. Hernando County tacks on another half cent for the schools.
Tim Campbell, an economist with the Florida Office of Economic and Demographic Research (EDR), said Florida is such a diverse state that the numbers can vary depending on region.
But his office has just released a report that shows collected sales tax revenue will continue to suffer, at least through fiscal year 2008-09.
In Hernando County, sales tax revenue collected for 2008 (through August) was at $57.4 million. The state collected $99.4 million in 2007; $104.2 million in 2006; $95.5 million in 2005; and $81 million in 2004.

Finance Director Amy Gillis stressed that most of that money goes to the state and other entities and not Hernando County.

For example, of the $6.2 million the state collected in August 2008, the county received $667,000, which goes into the general fund.

The October unemployment rate in Hernando County was 9.7 percent, fifth highest in Florida, said David Hamilton, contracts administrator for the Pasco Hernando Jobs & Education Partnership Regional Board Inc.

With those kinds of numbers, it's not surprising that sales tax revenue is down, he said.

"If there are fewer people working in the county, then less money will be spent in your county," Hamilton said.

Meanwhile, the EDR last Friday revised its revenue collecting forecast for fiscal year 2008-09 by $1.4 billion because of the worsening of the economy in the state.

EDR Coordinator Amy Baker said there are "three persistent economic shocks" running through the economy affecting revenue.

The first is the virtual shutdown of the credit market, which will "constrain the housing market, consumer expenditures and business investment," Baker said.

Second, the spread of the national recession to a global recession "will have spillover effects on business expenditures in Florida, in addition to dampening tourism and export growth," Baker said.

Finally, the deterioration of wealth from job losses and the continued depreciation of home values will exert pressure on discretionary spending, she said.

Tourism was down in October and people weren't buying as many automobiles, which contributed to the decline, Baker said.

The good news: While the economic outlook has worsened in the short run, growth rates are expected to improve by late fiscal year 2009-10, Baker added.