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Rapid City sees slumping sales tax collections

July 12, 2018

RAPID CITY, S.D. (AP) — Rapid City is facing hiring delays and cutbacks on nonessential purchases amid slagging sales tax revenues and the uncertain future of online sales tax collections.

The city’s Legal and Finance Committee reported Wednesday that this year’s sales tax collections are at $10.6 million, which is a less than 1 percent increase compared to last year.

Pauline Sumption, director of the city’s finance department, told the Rapid City Journal that the small increase is a problem because collections are typically projected to grow by around 2 percent each year.

“There’s a little bit of concern about where we’re going to end up at the end of the year for cash balance in the general fund,” she said. “Sales tax is down and if we continue to spend what we’ve budgeted (for fiscal year 2018) and if we continue to bring in only what we have projected for revenue, we’ll actually be down. Reserves will be down by $2 million of what is needed.”

Sumption recently met with city department directors and Mayor Steve Allender to recommend the city delay nonessential hires and purchases.

It’s also unclear how the U.S. Supreme Court decision last month to allow states to collect sales tax from online retailers might augment the city’s collections, Sumption said. The state Department of Revenue hasn’t indicated how much Rapid City might be able to collect from online retailers, she said.

“We have so many unknowns on how the online sales tax collection is going to impact us, the closure of several retailers,” said Alderman Jason Salamun. “At the same time we’re hoping for a great summer season ... but I think it’s something for us to keep our eye on.”


Information from: Rapid City Journal, http://www.rapidcityjournal.com

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