A report last week in the Herald noted the surprising news that sales tax collections in the city are outpacing 2019, despite the downturn spurred by the coronavirus pandemic.
In September, the city collected $2.24 million from sales made in July. That brought the total collection for the year to $19.49 million, nearly 6% higher than the same time last year.
This comes as lodging tax collections – a quarter of a cent per dollar spent on hotels or restaurants in Grand Forks – lag last year by some 25%. That downturn indicates fewer people coming to town to shop or for events.
In a conversation with the Herald last week, local Chamber of Commerce CEO Barry Wilfahrt highlighted a handful of other bright spots for Greater Grand Forks.
Among them: A 4.1% unemployment rate, which is considerably lower than during the spring and is only about 1.8% higher than normal in the community. Also, he said the federal Paycheck Protection Program has been a godsend for many local businesses.
During an online interview last week, the Herald asked Wilfahrt: “If you could go back to March 15 and look ahead to this day, would you say the community is better than expected back then or worse?”
Wilfahrt’s answer: “On March 15, I would have said we are worse off. If you asked me on April 15 or May 15, I would say we are better than I would have thought.”
He said “things are definitely looking more positive.”
We agree, although one area of improvement – online sales tax collections – isn’t necessarily a good omen in the long term. So far in 2020, online tax collections have totaled $714,000, already surpassing the $677,000 taken in all of last year.
Remember that prior to 2018, most online sales did not produce a local sales tax. Only after a court ruling that year were all online sellers required to remit sales taxes back to local entities.
During the pandemic, it’s obviously helping communities weather the proverbial retail storm, so to speak. But it also creates a hurricane in the crystal ball of the city’s retail future.
Retailers are closing as more people go online for everyday purchases. Thanks to the 2018 court ruling, communities are benefiting from the trend during a difficult time, but in the end, the increased business online will exacerbate the problem.
What will emerge? Probably a community with fewer stores, but an opportunity to expand in other sectors, such as manufacturing and tech. The city’s increased unemployment rate could actually help land more businesses in those sectors, since the region’s historically low rate (usually around 2%) and lack of available workers might deter a large business from locating here.
For now, the community should feel at least somewhat relieved that the economic wheels continue to turn during the pandemic.
And, as we have said in this space before, it’s still important to buy local, eat local and tip local. The people in our retail and hospitality trades need our help just as much as ever, regardless of the news that sales taxes are stable.