I want to take this opportunity to report the City’s sales tax collections for the first three months of the fiscal year.
The City’s sales taxes are collected by the State Department of Revenue and money is then transferred to the City four to six weeks later. As an example, business activity taxes for the month of June are due on July 20, therefore the City would see that money until the end of August early September.
As tax payments are received, staff reviews to allocate the payments to the proper period. After review of the first quarter payments of FY 19/20 that represents business activity from June through August, we experienced a 6.4 percent or $83,105 increase in sales taxes received compared to last fiscal year. This comparison does not yet consider the 1 cent sales tax increase that took effect on September 1, 2019. The increase can be attributed to the construction projects currently in the City, which include the wastewater treatment plant expansion, with approximately 40 employees living in the City, and the border wall construction project, with approximately 400 employees living in the City of Douglas.
Not all the of the increase in sales tax is attributable to the contracting jobs in Douglas. The increase is also attributable to the City of Douglas’ economy since the border wall contractor did not begin mobilization until late July with a few employees and has steadily increased its numbers. The increase in revenue is a positive sign as we look towards attracting more businesses into Douglas. Looking forward, we can also expect to receive more sales tax revenue from online retailers since, effective October 1, the State of Arizona adopted the North Dakota vs. Wayfair case making it mandatory for online and outside retailers to remit sales taxes on sales where the business sells more than $200,000 per year in Arizona. Thresholds will reduce to $100,000 in sales by 2021. This is a victory for our small and local businesses as they are now under a similar playing field against online/outside retailers that were not mandated to charge sales taxes on same or similar products offered on brick and mortar stores.
With the holidays quickly approaching, we encourage the community to continue to support our local businesses in Douglas.