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City sales taxes slip for 3rd straight month

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The city of Springfield is experiencing a revenue shortfall in its general fund due to lower-than-expected sales taxes coming into city coffers.

For the third month in a row, the city’s 1 percent general sales tax revenues were below fiscal 2017 budget projections, with April down by 5 percent, or $164,348, according to a news release from the city. March’s sales tax revenue was 8 percent lower than predicted, and February was 4 percent below budget.

Springfield Finance Director Dave Holtmann said strong revenue growth in 2016 led to more aggressive budgeting for the following fiscal year.

In the current-year cycle, Holtmann pointed to diminishing brick-and-mortar retail sales and rising internet sales. The city does not collect sales taxes on internet purchases.

National retailers operating in Springfield that have reported struggles or bankruptcy filings are JCPenney, Macy’s Inc. (NYSE: M), Payless Shoes, Kmart and Gordmans Stores Inc. (Nasdaq: GMAN). In some cases, closure decisions have come in recent weeks following lackluster holiday sales.

The last Springfield Kmart and another in Branson closed after Sears Holdings Corp. (Nasdaq: SHLD) announced plans to shutter 78 Kmart stores and 26 Sears sites. That was on top of news in December the holding company would close 30 Kmart locations and 16 Sears stores this spring.

The Limited store inside Battlefield Mall also is a casualty. Boca Raton, Florida-based ownership group Sun Capital Partners Inc. is closing all 250 of the women’s apparel stores, eliminating 4,000 jobs. The Limited’s website made a point to note online sales would continue. Another mall tenant, MC Sports, announced it would shutter all 68 of its stores.

While no local stores are affected, Macy’s Inc. and JCPenney also signaled they would shut down stores and lay off workers. Gordmans announced it was declaring bankruptcy but made an assets deal with Tiger Capital Group, Great American Group and Sage Stores Inc. Stage is choosing to leave the Springfield store open for now.

Holtmann said any collection of taxes on internet sales in the city would have to be approved by the federal government and could not be addressed on the state or local levels. Federal law doesn’t require online businesses to charge sales taxes unless they have a fixed asset, such as a distribution center, in that state.

The city’s general fund is budgeted at $80 million to support services such as police and fire. At about $45 million, sales tax revenues are the biggest contributor to the general fund.

Through April, overall fiscal 2017 collections are $36.5 million, or 4 percent less than budget. Despite the shortfall, Holtmann said the city has a cushion of $1.7 million, a carryover from 2016 that City Council agreed not to spend in anticipation of a possible drop in revenues.

“That gets us through this fiscal year,” Holtmann said. “But it just makes it more difficult in planning next year when there’s very little growth to be expected.”

Holtmann added a drop in revenue may put the breaks on any planning to grow city services in the future. However, he said the city would ensure that police and fire remain a priority.


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