With the fiscal year in full swing and Amazon now contributing sales tax collections to Oklahoma cities, Ardmore’s sales tax monies are coming in over budget, but city officials aren’t celebrating yet.
“I’m not sure if we’re seeing those numbers yet,” said Ken Campbell, Ardmore City Clerk and Finance Director. “I hope we will see the full impact of those collections soon. I’m hoping this isn’t it.”
In March, Amazon agreed to start collecting Oklahoma sales tax after the Oklahoma Retail Protection Act went into effect last November. The law requires online retailers that don’t have a physical presence in Oklahoma to either begin voluntarily collecting sales tax as customers make purchases, or bill customers at the end of the year.
The law applies to companies that offer similar product lines to Oklahoma businesses or have an Oklahoma business deliver products or perform services for them.
Amazon agreed to collect the sales tax at the time of purchase, and because they began collecting in March, Oklahoma cities would have seen these collections on their May ledgers. The process of collecting sales tax takes two months because merchants send the tax collections to the state, which then distributes it to the cities.
City Manager J.D. Spohn said that the battle with sales tax isn’t over.
“We’re always concerned about sales tax,” Spohn said. “We’re happy that Amazon is collecting the sales tax for us, but something needs to be done about the fact that cites are reliant on sales tax. We need to find other sources of revenue, like property tax.”
For the month of July, Ardmore collected $715,470 in sales tax revenue for the general fund — a 3.62 percent increase over the 2016-17 July collections. But, the increase didn’t hold steady in August. August’s collection of $727,531 is a 0.45 percent decrease from the previous year.
Spohn said it looks like the city’s sales tax collections are doing better than usual because officials decided to budget sales tax revenue expectations flat. Because of that, July’s collections were 4.28 percent over budget, while August was still .04 percent over budget.
In Oklahoma, the only revenue cities collect are sales tax, which they then use to fund everything from police departments to fire departments, the public library, animal control, street maintenance, and parks and recreation departments. The police and fire departments alone cost the city of Ardmore $8 million dollars annually. Of the nine percent sales tax that citizens pay when they purchase goods, only 3.75 percent goes towards Ardmore’s general fund.
“Everything depends on the sales that happen that month and each year is different,” Campbell said.
“We’re trying to be proactive and make adjustments quickly(so we don’t go into the red),” Spohn added. “That’s why some positions are frozen or we’re not hiring, and our employees didn’t get a cost of living raise this year.”
Campbell and Spohn both said unless the legislature comes up with new revenue generating measures for cities, all they can do for now is encourage people to shop in Ardmore.