State lodging, sales taxes down in May report

State lodging, sales taxes down in May report
(Source: WSFA 12 News)

By MARY SELL, Alabama Daily News

The coronavirus caused significant, but expected, drops in the collection of various state taxes in May.

Receipts in the state’s Education Trust Fund were down nearly $60 million, 8.13%, in May compared to the same month in 2019.

The COVID-19-caused drop in education budget tax revenues were most noticeable in the sales tax, down $28.7 million, and income tax, down $26.2 million.

Senate education budget committee chairman Sen. Arthur Orr, R-Decatur, said Tuesday he’s not yet concerned about the numbers.

“We seem to be tracking what was forecast by the economists and budget analysts,” Orr said. “We’ll know a lot more in August, after the July income tax payments for 2019 come in.”

The income tax filing and payment deadline was extended from April to mid-July because of COVID-19. Meanwhile, many businesses were also given extensions on remitting collected taxes. Because many taxes are collected in arrears, much of the May collection represents April activity.

In the General Fund, receipts were down in May $1.5 million, or .8%, compared to a year ago. One of the largest declines in that fund was a more than 70% drop in the lodging tax as people stayed home and away from beaches during state-ordered shutdowns.

Revenue from the lodging tax is split between the General Fund and an earmark for the Alabama Department of Tourism, which it uses to market the state to travelers. In all, it was down almost $4.8 million compared to May 2019.

But because hotels and other lodging providers also have an extension for remitting taxes, Grey Brennan, deputy director of tourism, said that decline may not be accurate.

“There is no way to know if this is the real number,” Brennan said Tuesday.

Brennan said the department has heard that outdoor facilities, including RV parks, are doing well.

“Some of the hotels that cater to business travelers aren’t doing as well,” Brennan said.

The coronavirus and decline in revenue has altered the tourism’s marketing of the state and it’s focusing on attracting in-state travelers and those within driving distances to state attractions.

“People are taking shorter trips and going to places they perceive to be safe or safer,” Brennan said.

“…Hopefully some point soon we’ll be back to our normal marketing plan, but we’re not there yet.”

Despite some dips, the General Fund’s revenues are up year-over-year.

“General Fund receipts were basically flat for May, but are still up by over 8% for the year,” Kirk Fulford, deputy director of the Legislative Services Agency, the State House’s budget experts, told Alabama Daily News.

“There could be another dip in June, but revenues in July should pick up due to the delayed tax payments coming due,” Fulford said. “When COVID impacts first started to hit in March, both of the budgets were ahead of estimated revenue projections for the year. And, ETF expenditures for the current year are still about $55 million less than receipts in fiscal year 2019.”

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