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LOST income surprises Jefferson

POSTED: May 17, 2009 10:31 p.m.

Although sales tax collections tend to fluctuate from month to month, recent revenue tallies have caught Jefferson officials off guard.

In January, Jefferson officials collected $56,991 in Local Option Sales Tax funds from the Georgia Department of Revenue. In February, the city only collected $45,080.

“We expected the collections to be lower than they were at the same time last year, but we didn’t expect them to drop that much,” said Amie Vaughan, Jefferson finance director. “This is the lowest amount we’ve collected since the recession started.”

Although LOST funds are generated locally, the taxes are collected by the state and then redistributed back to the local communities that they came from. Sales tax distributions from the state lag behind the actual collection times by two months, so Jefferson officials received the February’s collections in April.

“(Our city manager) has looked into several reasons why February collections were so low, but he hasn’t found out anything other than collections being lower across the board around the state,” Vaughan said.

According to the state revenue department, local sales tax distributions statewide dropped by more than $100 million from $439,530,000 in January to $330,594,000 in February.

“Since LOST collections had already dropped from December to January, for them to drop again in February it’s like ‘Where did that come from?’” Vaughan said.

Although having such low LOST collections greatly affects the city’s budget, Vaughan said she doesn’t think it’s time to worry just yet.

“If collections continue to stay around $50,000 we are going to come up short for the year,” Vaughan said.

“We’ll cut expenditures if need be, but we hate to react of one or two LOST deposits because the next month could be a large one that offsets the previous months. We’ll just have to keep a close eye on it.”

For the current fiscal year, city officials estimated that $920,000 would be generated from LOST funds. If the LOST receipts continue to hover around $50,000, Vaughan said there are a few safeguards built into the budget that may spare the city from having to cut back on expenditures to balance the budget.

“This year, we budgeted $850,000 in electric franchise tax fees,” Vaughan said. “Last year, we received $1 million; so knowing that, we will probably receive more electric franchise tax fess than what we budgeted for, so that would help to offset any LOST shortfalls.”

An earlier version of this story used incorrect figures for the amount by which statewide local sales tax distributions dropped in February.



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