Recent job losses sparked a downturn in local sales tax revenue this year, which might hold concern for the county’s budget in later months, officials said.

Saturday, July 01, 2000

Recent job losses sparked a downturn in local sales tax revenue this year, which might hold concern for the county’s budget in later months, officials said.

"It’s dropped some from what we’re seeing right now," county auditor Ray Dutey said.

March sales tax revenue, the latest the county has received, shows about $78,000 in income, which is significantly lower than March 1999 revenue, Dutey said.

Overall, sales tax figures will probably not hit a record low, or even be that far off, but they do show the effects of the county’s job losses, he said.

"I think we’re just seeing the fallout from Cabletron and Ironton Iron."

On the heels of Ashland Inc.’s move out of Ashland, Cabletron Systems announced last spring that it had signed a letter of intent with Celestica Inc. to outsource its manufacturing operations. That led to the plant’s shutdown – and the loss of 300 jobs – by late summer.

Just months later, on Dec. 7, Intermet-Ironton Iron announced that its foundry would shut down by February, meaning the loss of more than 600 jobs.

Consumers who contributed to steady sales tax revenues likely became scared to spend much after Christmas, which could have contributed to the dip in March’s sales tax revenue, Dutey said.

A lot of people could have said it was time to tighten up on spending and see what happens, he said.

Then again, there could be other factors contributing to the sales tax decrease, or it could just be a one-month abnormality, he added.

County officials will examine more numbers and compare data this week, Dutey said.

"We’ll know more then."

The preliminary scare from the revenue decrease comes at a time when county officeholders are beginning the budget process for their 2001 operations.

Although sales tax makes up only a portion of the county’s total revenue, it can have a significant effect, Dutey said.

If it appears sales tax revenue will continue to fall, there’s nothing much that can be done except re-examine budget figures, he said.

"If it’s not there, we’ll have to take a hard look, and then it will be crunch time in the fall," Dutey said.

Thursday, commissioners held a hearing on the working draft of the county budget. Although official budget work will not begin until late summer, the hearing is a technicality required by state auditors.

The county usually budgets and spends between $10 million and $11 million in its general fund. Total budget for all government entities in the county averages about $40 million.

When the county’s budget committee meets in August, it will take each office and government budget request, look at what was spent in the previous budget, then look at revenue projections before drafting the official budget, deputy auditor Chris Kline said.

Tax settlement figures, as well as six months of revenue data, are available by then, which paints a better financial picture by which to draft the budget, he said.