Aldermen present FY 2019 budget
The City of Oxford is projecting some economic challenges thanks to lower sales tax revenues, online shopping and this month’s impending annexation.
Mayor Robyn Tannehill addressed the issue, first explaining the Board of Aldermen’s challenges from a population standpoint.
“It is important to understand that we are a community of about 22,000 taxpayers,” Tannehill said. “We are a community that has between 40,000 and 60,000 people in our city limits most days, and 80,000 to 100,000 most weekends. It’s just difficult to make those numbers work.”
For the first time in many years, Oxford saw a 1 percent decrease in sales tax revenues. In fiscal year 2017, the City took in 9,736,286.24. FY 2018 yielded 9,679,239.96.
While 1 percent may not seem like a dramatic loss, Tannehill said it’s actually a major issue in the grand scheme of things.
“You might think, ‘Oh, well it’s just down 1 percent, that’s not that big of a swing,’” she said. “But we’ve been seeing increases of between 5 and 9 percent each year, so that 1 percent down really is a big swing, and we are projecting we will be down 6 percent in the coming year.”
It’s no secret that the infrastructure boom in Oxford was especially evident over the last year, with new business developments popping up left and right. However, Tannehill said Oxford’s businesses face some steep competition when it comes to online shopping.
In Mississippi, online sales tax revenue currently goes directly to the state. However, the state legislature passed the Mississippi Infrastructure and Modernization Act during special session, which will divert those online sales tax dollars back to local government.
$23,850,000 of the online sales tax revenue will be divided by population, and another $23,850,000 by sales tax percentage. A remaining $3 million will be divided equally, meaning Oxford would receive, as Tannehill called it, “a whopping $10,033.”
Based on the state’s formula, Oxford would receive 18.5 percent of the 7-percent sales tax dollars and 15 percent of the online sales tax dollars.
“With all of those figures in mind, the City of Oxford’s portion would be $826,709, which would be great if they were sending that check. They’re not,” Tannehill said. “They are going to implement this over a four-year period. In August of 2019, they will issue the first check, which will be 25 percent of that amount, which for Oxford would be $206,677. Then in 2020, they would disperse 50 percent, which would be $413,354. In 2021, 75 percent, which would is right over $620,000. In 2022, they would be diverting this tax at 100 percent, which would be the full $826,709.”
Tannehill also noted that funds generated by building permits are down by $400,000, because the majority of permits issued have been for renovations and other projects that did not generate as much revenue as previous years.
With all of these issues combined, Tannehill said the mother of them all is annexation. Even though it’s clear the annexation will benefit Oxford in the long-term, she said, there will be a few years where the City will have to play catch-up.
“It’s my job to be the official wet blanket of all city meetings, but the annexation will take place probably in the coming month and services will be provided immediately,” she said. “However, the newly annexed areas will not be added to our tax base in this fiscal year, so we’ll provide all those services for a full year before all the people who are annexed will begin paying those city taxes. Even then, the City will not recuperate all of the funds. It’ll take us a while to catch up.
Over the next four years, the City has projected it will see more expenses than revenues. In 2019, the deficit is projected to be $302,000. In FY 2020-2021 it will decrease to $41,000, and in 2022, the City will then start to see an uptick in revenues.
Although the City advertised a possible tax increase of two mills, Tannehill said the board has spent the last six weeks moving monies around to find a balance to maintain the level of services the community enjoys and expects while tightening the financial belt in preparation for the transition into annexation. In doing so, the City announced it will only increase taxes by one mill.
“We advertised a two mill increase, but the board is committed to not raising taxes more than one mill,” she said. “To put what one mill looks like to taxpayers in the City of Oxford, for every $100,000 of assessed value for a homesteaded property, you’d see an increase of $10 a year. For every $100,000 of assessed value, if it’s a non-homesteaded property, not your primary residence, it will be a $15 a year increase.”
Revenue generated by the one mill tax increase will go to the City’s general fund. The Board of Aldermen will take the issue to a vote during a public meeting on Sept. 30 at 11:30 a.m.
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