Local governments count on sales tax

A man carries his purchases after shopping at the Manassas Mall in Manassas, Va

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Bill Radke: You've got one more day to decide whether you can afford any more Christmas presents. And though we usually talk about retailers hoping you're in a spending mood, Marketplace's Amy Scott reminds us local governments are counting on you, too.


Amy Scott: The town of Mesa, Ariz., depends on its local sales tax for almost a third of its general fund. That pays for the police and fire departments, libraries, and parks.

Deputy City Manager Brian Raines estimates sales tax revenue has fallen about 9 percent this year. He won't know for a while how holiday sales held up, but he's not very optimistic.

BRIAN RAINES: We've learned here over the past few years, as revenues across the board declined, to not expect a great deal.

Mesa has been hit hard by the housing bust. It's had to cut 10 percent of its workforce. One thing the city can be thankful for -- it didn't get hit by a blizzard last weekend.

Kim Rueben is an economist at the Tax Policy Center in Washington, D.C. She says when people in her area couldn't get to the stores, they turned to online shopping.

KIM RUEBEN: Which, in theory, people should be paying sales taxes on those sales. But in practice, people don't normally pay sales taxes.

The National Retail Federation predicts holiday sales will be down about 1 percent over last year. Rueben says nationally about 10 percent of city revenue comes from sales taxes. And with revenue from property and income taxes down, too -- every bit counts.

I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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