Sunday, January 7, 2018

Bill Crawford: Store closings, online sales, legislature imperil cities

Stagnant tax policies and anti-tax fervor coupled with the Legislature's inattention to changing business patterns will play havoc with local government financing over the coming years.


Here's the backdrop.

Municipal finances depend heavily on sales taxes that the state collects and shares with communities where the sales occur. Growing online sales by Amazon, Wal-Mart, and other major retailers take sales away from local stores. And even though Wal-Mart and other retailers with physical presences in the state collect taxes for online sales, the state defines these as "use" taxes and does not share them with municipalities.

From FY 2011 through FY 2016, sales tax diversions to municipalities grew an average of 3.1% each year. However, from FY 2016 through FY 2017, total diversions hardly increased, up just 0.4%. At the same time, in the first quarter of 2017, Wal-Mart online sales jumped 63%. For the first five months of FY 2018, total diversions increased just 0.3%, while Amazon sales surged, growing to 43% of the e-commerce market.

Legislators' lack of interest in giving municipalities a share of use taxes was evident at the start of the new legislative session. On session's second day, the House Ways and Means Committee approved a bill that would spend use taxes collected from companies like Amazon on road and bridge repairs.

Reflect on this for a moment.

The expert from the conservative Tax Foundation brought in by legislative leaders to provide guidance on "tax reform," told legislators costs for road and bridge building and maintenance should be paid for with fuel taxes, i.e., those who use roads and bridges should pay for them. Short-sighted anti-tax fervor has so far killed all efforts to boost fuel taxes, leaving browbeaten legislators no choice but to rob other funds for much needed road and bridge repairs.

Sigh. There's more.

Surging online sales are also beginning to impact city and county property taxes as more and more retail outlets close. This is a double whammy for municipalities as they lose both sales and property taxes. Fung Global Retail & Technology tracks retail store openings and closings. In 2017, it reported 6,985 store closures nationally, up 229% from the prior year. Recent closures impacting Mississippi include Bed, Bath and Beyond, Sears, JC Penney, Payless, Winn-Dixie, Kroger, and Gander Mountain. Even Wal-Mart is closing stores as online sales increase.

Analysts expect much worse. Bloomberg linked the impact of growing online sales on brick and mortar retailers with increasing retail bankruptcies and problems with store credit cards to forecast a "retail apocalypse." Credit Suisse forecast "a wave" of retail store closings and bankruptcies in early 2018. Those are pretty bleak forecasts given that store closings in 2017 almost surpassed the all-time high from the 2008 financial crisis.

Of course, billionaire investor Warren Buffett anticipated this trend in online sales and cut his investments in brick and mortar retailers. We can't expect state government to be as savvy about the future as Buffett, but we should expect them to catch on when the writing is on the wall.

Fast changing business patterns have dire implications for traditional local government financing. Stagnant tax policies, which are totally under control of state legislators, need to be modernized and reformed with regard to local government.



Crawford (crawfolk@gmail.com) is a syndicated columnist from Meridian.

8 comments:

Anonymous said...

The online sales "problem" can be traced back to several things.
Next time you are in Walmart look at how many cash registers are open. Look at how long the lines are. Take note of all of the mistakes the person working the cash register makes. Ask anyone working in the store a question about the location of something or even the price of something.
Now compare that to ordering on line. There is no way you can compare the experiences.

The fuel tax and our roads and bridges was a loser from the start. Too many times the fuel taxes were used for other purposes. Just look at the amount of money the government received from the fuel tax. The only thing that had grow more is the waste of that tax received. Paperwork takes up more tax dollars than the actual project. Then we pile on all of the waste and nonsense.

If it wasn't for government carelessness, crooked politicians, and wasted money both the fuel tax and the sales tax would pay for what it was intended to pay for in the first place.
We are too worried about which political party is in power than we are about the condition of our roads and bridges. We continually elect people who know nothing about the reason they are in office but are very good at blaming everything bad on the other party.
We have made blame more important than our roads and bridges. We are getting what we think is the most important thing.

Anonymous said...

We have seen the enemy and he is us!

Anonymous said...

Just like in DC the powers that be in Jackson know what's going on. The tax cuts are trickling down. Which means increase taxes at the city and county level. They are really smart and very stable geniuses.

Anonymous said...

January 7, 2018 at 10:26 AM = 13,767th variant of the same comment

"We are too worried about which political party is in power ..." yada, yada, yada

Anonymous said...

12:54 - Just because something is often repeated does not make it untrue.

You may have heard this before as well; when you send your money out of state, local business will close down. Your, your children and grandchildren will not have jobs. Big corporations and states like Washington, California, New Jersey will benefit. So will the shareholders of those publicly traded companies.

Quicken loans is credited for saving downtown Detroit by bringing in 8,000 employees to the area. Great for Detroit and Quicken. But when you do business with large companies that are not in your state the state suffers. Loan officers in your area lose jobs, they don't have money to spend and whatever business it is that you are in suffers as a result.

Warren Buffet and many others know this. Keep spending money with Amazon. Washington State thanks you. (or they don't)

Anonymous said...

3:07, you make a good point about keeping money local. But what is someone supposed to do if local loan officers won't loan, but someone else will. Should I worry about sending money out of State when many business pulled out of Jackson, therefore already redistributing the revenue and not leaving enough to maintain infrastructure.

Same with the money for roads and bridges. Enjoy the widened interstates in Madison and Rankin? That was done with money, based on population, that should have finished I-55 to Byram first, and then widened I-20 through Clinton.

Republican or Demoract, most elected officials have agendas other than the greater good, sound government and fiscal responsibility. Might as well ship out revenue out-of-State. We already do so with our athletes and young bright minds.

Emmit's Repair Shop said...

Everything changes.

We don't go to Jack's Hardware for three nuts and bolts any more. Jack went out of business years ago. Forced out. We didn't care. Jack was dispensable. He can move in with his kids for all we care.

The malls are empty and we like to blame that on crime, yet we order everything over the internet - everything that we used to tromp off to the mall to buy.

Over the past hundred years we got real accustomed to the government tit. And we nurtured that system. It paid for our highways, street lights and water systems. And we elected smooth talkers and sent them 'up there' to be sure when the tit got squeezed, we got more'n our share. But the tit is drying up. Everything changes.

We need to get back to the time when we went into a store and plopped down fifteen fox-pelts and bartered for flour, molasses and a cured ham.

Ain't no damned politician gonna protect us from ourselves.

Anonymous said...

12:54 pm You are fantasizing if you believe that only one person holds views that differ from your own.

You are delusional to think your snide comments will alter anyone's point of view or deter them from expressing their view.

You don't vary , however. You are continuously unable to state a rationale for or defend your point of view or point. Nor can you point out the errors in the views with which you disagree.

By the way, I'm not 10:24 am

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


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Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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