SHERIDAN — While Sheridan’s sales and use tax revenues have continued to grow this year, those gains are increasingly dependent on internet, rather than local, sales, according to a presentation City Treasurer Karen Burtis delivered this week.
The city’s internet sales tax returns have grown by 157% in 2019 over last year, year-to-date, which equals about $100,000 in additional revenue.
Burtis’s presentation also showed internet sales tax revenues in July — sales and use tax reports are always two months in arrears — were up 236% over July 2018, an increase of just more than $50,000.
Those profits have bolstered Sheridan’s overall sales and use tax revenues. The city’s year-to-date sales and use tax up 4.4%, or about $48,000. The city’s budget anticipated sales and use tax would increase by 2.5% this fiscal year, so the city’s returns are exceeding expectations.
Monthly sales and use tax has also risen by 6.9% over last July, or about $26,000.
But Burtis said internet sales tax revenues account for a larger portion of Sheridan’s total tax income than they have in the past.
“(Internet sales tax) represents 14% of our overall sales and use tax whereas last year it was only 5.7%,” Burtis said. “If you were to back out those internet taxes for last year and this year, the sales and use tax would actually drop by $51,000 from last year, or a 4.9% decrease… Internet sales tax is extremely important to us.”
Council Vice President Thayer Shafer said those numbers concerned him as they could indicate a shift in consumer behavior, which Burtis said was a fair assessment.
“It seems like what that indicates — to some extent anyway — we’re losing sales locally to the internet as opposed to people buying things on the internet that they just can’t purchase within Sheridan,” Shafer said.
Fortunately for the city, Burtis said a law that took effect in February requires all businesses that sell products within the city limits — including online retailers that don’t have a physical presence in Sheridan — to report and remit internet sales taxes.
“It’s a good thing that we have that, otherwise we might be hurting,” Burtis said.
Burtis’ presentation also touched on city lodging tax revenues and noted a short-term discrepancy between the revenues being reported and the lodgers visiting the city.
Lodging tax revenues this year were down roughly $30,000 compared to last July and down roughly $13,000 year-to-date compared to last year.
While lodging tax revenues are down, lodging occupancies have actually increased in Sheridan compared to last year, Burtis said. The city saw occupancies increase by 1.5% compared to last July, and year-to-date occupancies are up 6.5% from 2018.
Burtis said she believes lodging tax revenues do not reflect occupancies because taxes are not being remitted in a timely manner after a local lodging books an occupancy.
Overall, Sheridan’s tax revenues remain strong, but the latest data suggests the sources of those revenues could be changing.