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March sales taxes up from previous year, decline anticipated in coming months

In the city of Picayune, sales tax collections during the month of March rose, but City Clerk Amber Hinton said she is prepared for an anticipated decrease in the coming months.
Sales tax diversions provided to municipalities by the Mississippi Department of Revenue are provided to each city two months after those funds were collected.
This month, the city of Picayune, like all municipalities, will receive 18.5 percent of the revenue collected from all sales within the city limits conducted in March.
Hinton said she has seen an increase in those funds from the previous month and over the year.
This month, the city will receive $442,232 in sales tax diversion from the state as part of the total sales collected in March. That is an increase from what Hinton budgeted for that month, $397,190, and an increase from the previous fiscal year’s collection of $433,011 during the same time frame.
While there was an increase in sales tax collections in March, which was the height of panic buying, the following months may entail decreases.
Hinton said economists have advised that municipalities should brace for a 5 to 7 percent decrease to their general fund. As the city moves into the next fiscal year, Hinton said she is preparing to suggest the Council adopt a budget with a five percent reduction in general sales tax and a seven percent decrease in tourism sales tax.
She is also in the process of looking for ways to cut the current budget to balance it should she need to.
Even if tough times do occur, the city has a reserve fund of about $2.5 million.
“We have a pretty good reserve that should get us through a tough time,” Hinton said in a text message.
If the worst should occur, Hinton said that amount of reserve will hold the city over for about three or four months with no other revenue coming in. But she said she does not see a situation like that occurring, since a most of the businesses that remained open in Picayune during the COVID-19 pandemic and subsequent shelter at home orders were the larger operations in Picayune. Even the smaller businesses that stayed open made adjustments to do so, meaning they also continued to collect sales tax revenue.
During the month of March, shoppers in Picayune spent a total of $51.6 million, of which $2.4 million was sales tax. The city received 18.5 percent of the sales tax total, according to information from the Mississippi Department of Revenue’s website.
Of the total sales made in Picayune, $37.4 million was in retail services. The next highest category was in wholesale trade, which totaled $1.4 million, the information from the Mississippi Department of Revenue’s website states.
For the rest of the fiscal year, Hinton budgeted the city receiving $397,190 in sales tax diversions each month. During the last fiscal year, the city received $425,754 from taxes collected in April, and $430,772 from taxes collected in May.