Unprecedented Reductions in Sales Tax Advances to Cities

As if more evidence were needed of the state’s ragged economic condition, the Board of Equalization in 2009 made unprecedented reductions in the sales tax it advances to cities.

“There have never been broad scale reductions like this,” said Anita Gore, a spokeswoman for the board.

Each month, the board looks at cash receipts and a variety of other factors and then forwards sales taxes collected to cities. 

Last year, cash receipts declined – nearly 15 percent in the third quarter – forcing the board to send letters to 535 localities saying the payment to them would be reduced. In August, 337 localities saw reductions in their sales tax advance. In May, 473.

Some of the 535 cities saw 10 percent reductions. Most received a 6 percent hit.

Not all cities were affected – the board makes the monthly allocations to 768 localities.

Besides the fall in cash receipts, the formulas that determine the allocations are based on previous sales patterns that are not occurring in current economic conditions, the board said in a November press release announcing the additional reductions.

(A link showing the affected cities appears at the bottom of the release. The number in red is the latest quarterly reduction. The number on the far right is the current monthly payment.)

Geographically, the affected cities span the state and range in size from the small to the large.