Despite the Freedom Industries chemical leak, Charleston’s municipal sales tax collections were higher than expected for the collection period from Dec. 1 to Feb. 28.
Officials have repeatedly expressed concerns that the widespread water contamination would be devastating to local business, but during that time, the city’s half-cent sales tax brought in about $1.8 million — more than projected.
“I was happy,” City Finance Director Joe Estep said.
While the tax period includes the water contamination, which affected businesses in the city, it also included the bulk of the 2013 holiday shopping season.
The city expected to receive $6 million in sales tax revenue for the entire year. During the first two months of the tax, in October and November of 2013, the tax brought in just more than $1 million.
“Even if it’s not $1.8 million every quarter, clearly it looks like we erred on the conservative side,” Estep said.
Charleston has earmarked the tax revenue to fund bonds for renovations to the Charleston Civic Center. The money can also be used for other “economic development or public safety projects.”
In March, city council approved a $1.16 million contract with O’Dell Associates for consulting services for the renovations.
Business and occupation tax, however, could be a different story.
In recent quarters, B&O tax collected by Charleston has been on the decline, and Estep said he doesn’t expect that to change any time soon.
“I’m pretty sure of this — our trend of underperforming is not going to reverse,” he said.
To balance the city’s next budget, council had to dip into the stabilization fund to make up for a projected $1.13 million drop in B&O tax for fiscal year 2015.
However, Estep isn’t sure how much of a hit the city will actually take from the water contamination, as B&O taxes for the most recent quarter are still being remitted to the city.
Taxes for the quarter from January through March are due to the city by April 30. Estep said about 70 percent of taxpayers have their taxes in on time, and the rest are submitted late. Most of the late returns are within the first 10 business days after the deadline.
Therefore, within the next month, Estep said he should have data available to be able to compare the first quarter of 2014 to the same quarter last year.
Still, because of lower B&O tax trend before the water contamination, Estep said he wouldn’t be sure if any losses are due to the economy or the water situation.
“As long as we’re in a downturn . . . I won’t be able to tell if it’s due to water or the economy,” he said.