The recession may be over, but sales tax revenues have yet to show it.

And local government officials who hoped for the economy to level out this fall are still waiting to see what affect it will have on government budgets and residents’ property tax rates.

Both Hall County and Gainesville’s budgets rely on revenues from the Local Option Sales Tax. For years, the 1 percent levy has been lauded as a way to maintain government services without hitting residents with higher property tax bills.

About 20 percent of Gainesville’s budget relies on revenues from the tax; more than 22 percent of Hall County’s budget is supported by it.

Revenues from sales taxes depend solely on consumer spending, which has been sluggish across the country as jobless rates have soared.

But Gainesville and Hall County officials were expecting those trends to improve by now.

In June, Gainesville’s Administrative Services Director Melody Marlowe and City Manager Kip Padgett, hoping for sales tax revenues to begin a return to normal this fall, loosened the city’s purse strings.

The two OK’d expenditures on needed capital items, such as computer equipment, allowed some discretionary travel and ended a monthslong hiring freeze.

But as sales tax receipts continued to lag, Padgett sent a memo Sept. 30 to city department heads detailing what he called a “proactive” policy to address slumping revenues. It halted capital purchases and reinstated the citywide hiring freeze and the ban on employee travel.

“As most of you are aware, the FY ’10 budget was prepared under the assumption that there would still be some decline in revenues, but we would level out early in the fiscal year,” Padgett wrote. “In looking at numbers from the state and some of our year-end numbers from FY ’09, I have some concerns that the leveling-out anticipated will not occur in the time frame that was predicted.”

Compared to the same six months last year, Gainesville sales tax revenues are down by about 22 percent, Marlowe said.

“We had hoped to start seeing some trends with sales tax collections going up, but we’re not seeing that yet,” she said.

County officials are reacting to the extended slump in sales, too. The 2010 budget Hall County commissioners approved in June projected that revenues from LOST would rebound slightly.

But in September, as sales tax revenues showed no signs of improvement, Finance Director Michaela Thompson recommended more cuts to the budget.

To cope, commissioners cut matching retirement benefits for employees and pay raises. Capital expenditures have been out of the question for a while now, and employee furlough days have been in place for a year.

“We haven’t bought a new patrol car in two years,” Thompson said. “... You’ve got to make adjustments.”

And in a recession, two tax-free weekends mandated by the state likely did not help.

A fiscal note attached to the state legislation calling for the August and October sales tax holidays predicted that local governments across the state would lose approximately $9.91 million on tax-free weekends, according to Lindsey Napier, an attorney for the state House’s Ways and Means Committee.

But the real impact of those tax holidays on Hall County’s revenues is still an uncertainty, Thompson said.

Although some economic experts believe sales tax holidays bring out shoppers who buy items that are not exempt from taxes, Clint Mueller, a legislative director at the Association of County Commissioners of Georgia said: “there’s a general belief that there’s a revenue loss associated with it.”

Though Federal Reserve Chairman Ben Bernanke said in mid-September that he believes the recession has ended, Thompson is no longer planning on sales tax revenues returning to normal soon.

“Right now, it has to do with economic spending, and that’s not happening,” Thompson said. “People that do have jobs are concerned about them, so they’re not spending. People that don’t have jobs are keeping their head above water and conserving all the monies that they have, and it’s going to take a while. It’s not going to be over in a couple of months.”

Overall, the county’s LOST collections are 12.2 percent below what they were last year, Thompson said. She does not know what will happen if the revenues continue to be lower than projected.

“We’re very limited ... We’re not in the business to generate revenue. We’re in the business to service our citizens,” Thompson said. “So what do you do? Decide that you’re going to raise the building permit (fees)? ... Fees on services are a small part of where our revenue comes from. So are you going to burden the taxpayer even more by raising fees or by raising property taxes? I don’t know. That’s not my call.”

Future budget planning is difficult in this economy because county and city employees have never experienced a recession like this, Thompson said.

“With us going into the financial crisis and the things that have happened today in this economy, it kind of makes your model get thrown out,” Thompson said. “And you’re starting from scratch, because you can’t normally use historical data.”

But Mueller, who advises counties on financial policies, the next step is simple, even if the future is unpredictable.

“When LOST (revenues) ... are down that means we have to make up the difference through cuts to the budget or raising the property taxes to make up the difference,” Mueller said. “So a lot of counties are having to make extra cuts to their budgets to offset the Local Option Sales Tax revenues.”