An Outlook: County Sales Tax Figures Show Strong Growth

Last week we received word from the Door County Visitor Bureau (DCVB) that room tax collections for July of this year were 6.2 percent up from July of 2014. The DCVB went on to report that, for the first seven months of this year, room tax collections are up 7.1 percent above the same period last year.

So this great news caused one of my two bosses at Peninsula Publishing & Distribution, Inc. (notably, the one that signs my paychecks) to wonder if I had looked to see how county sales tax collections were going this year. Well, folks, I hadn’t looked until this subtle prod led me to my computer and the Wisconsin Department of Revenue’s website.

I make a point of checking on county sales tax revenue several times throughout the year and, if you are a regular reader of this column, you know the qualifiers and explanations that the data requires me to include. Nonetheless, I need to include the following information for potential new readers of this column.

The county sales tax figures shown in the table that accompanies this column derive from that half-percent sales tax Door County (and most other counties in Wisconsin) charges. Merchants, innkeepers, restaurateurs, etc. collect this tax and submit it to the state (along with the state sales tax of five percent) and the state then redistributes the county tax portion back to the appropriate county. These distributions can be found – broken down by county – on the Wisconsin Department of Revenue’s website I mentioned above.

One thing that is important to keep in mind when you look at these distributions is that the total for any month reflects exactly what was collected during the previous month. Each individual merchant (or innkeeper, or restaurant owner, etc.) may have differing deadlines for when the tax is due to be paid (i.e. monthly, quarterly, etc.). Likewise, if a merchant, restaurateur, or hotelier pays room tax of July of 2014 in January of 2015, the amount paid is paid to the county in the February 2015 disbursement. Thus, comparing January 2014 to January 2013, for instance, doesn’t provide any clear indication of an individual county’s economic health. Looking at a broader picture of county sales tax collections, however, can provide at least some indication of the economic health of a county.

I should also note that the room tax collections differ from sales tax collections in that the room tax is reported for the month the room rental occurred. In other words, July room tax revenue is always July room tax revenue, regardless of when the hotelier pays the tax. So, in the scenario above, room tax paid in January of 2015 for rooms rented in July of 2014 is back credited to July of 2014. Therefore, room tax figures are an extremely accurate portrayal of room rentals on a month-by-month, year-to-year basis.

So with all of the above as a preface, the time has come to see how we are doing through the first nine months of 2015. As the table below shows, we are significantly up from 2014. Indeed, the $194,831.92 increase in collections translates to an impressive 8.4 percent rise. Keep in mind that this money comes from just a one half of one percent on taxable purchases (.005).

So now, if you are so inclined, you can do the math to determine how much more was spent (on taxable merchandise) in Door County through August of this year. The formula is (.005)x = 172,518.41 (where “x” is the amount of additional spending) or x = 172,518.41/.005. If your result matches mine, then you will see that a whopping $38,966,384 was spent this year compared to the same period in 2014.

Between the numbers from the DCVB and the sales tax numbers it is obvious that, thus far, 2015 has been a very good year for business in Door County. Now, we need to begin looking at augmenting our work force to manage all this increased business.