Slumping sales tax collections Baton Rouge point to bigger problem

    While sales tax collections in East Baton Rouge Parish were down in June compared to June 2018, the bigger concern for city-parish leaders is the fact that other revenue sources are also on the decline.

    Figures released Wednesday show overall sales tax collections for the parish were down nearly 1.5% in June over the same period a year ago. That’s not terribly troubling, especially when you look at year-to-date numbers, which show overall sales tax revenues were actually up 1.5% for the first six months of the year compared to the first half of 2018.

    The problem is that sales tax revenues are only one three major sources of income for local government. The other two—a franchise fee, which is only collected for the city of Baton Rouge, and gaming revenues—are also down.

    For the first six months of 2019, gaming revenues in East Baton Rouge Parish were down more than 6.5% over the first six months of 2018. Meanwhile, gross receipts from the city’s franchise fee, which is paid largely by utilities, were down more than 3.9% over the first half of 2018.

    “Typically, you’ll see just one of these go down but not all three at once,” says Angie Savoy, budgeting manager for city-parish government. “So the combination of all three does concern us. We’re monitoring it very closely.”

    Savoy cannot say for sure what the reasons are for the anemic numbers, which are lower than was projected several months ago, and because of confidentiality issues, she cannot say what large taxpayers in the parish are not paying as much as they have in the past.

    But one likely factor on the sales tax side is the loss of Georgia Pacific, which closed the communications division of its Port Hudson-based paper mill in March.

    As for the gaming revenues, those have been on the decline for more than two years, not only in Baton Rouge but nationwide. While the gaming industry, locally, has blamed a smoking ban that went into effect in 2018, casino winnings were decreasing long before the new law went into effect.

    A deeper look into the recent sales tax figures shows most of the decline in June over the previous June came from the city, not the parish as a whole. June sales tax figures in the city of Baton Rouge, were down more than 5% over the previous year; though, again, the city’s year-to-date collections were actually up a slight 0.5%

    For city-parish officials currently in the process of preparing the 2020 budget, the anemic sales tax figures and, potentially, continued revenue declines, makes balancing an already lean budget that much harder. Chief Administrative Officer Darryl Gissel says the administration is keeping a close eye on monthly trends, budgeting conservatively and cutting expenses where possible.

    “We’re making reductions where we can as we go through the hearings,” he says. “There are some revenue sources that are not accounted for yet and we’re hoping things pick up in the second half of the year. But the largest part of our budget—59 percent—comes from sales taxes so when that’s down even a little it can have big impact.” 

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