Pandemic aid fuels spending, sales tax revenue

D.E. Smoot, Muskogee Phoenix, Okla.
·2 min read

May 20—Muskogee recorded its largest monthly deposit of sales tax revenue since the collapse of financial markets in 2008 other than an anomaly that inflated a deposit four years ago.

Officials credited the spike in sales tax collections to consumer spending fueled by pandemic relief funds authorized by the American Rescue Plan Act. The measure, approved in March by congressional Democrats, included $1,200 payments to individuals and extended pandemic unemployment benefits of $300 a week into September.

The Oklahoma Tax Commission reported the city's share of sales tax revenue disbursed in May totaled $2.79 million, a 32.23% increase from the $1.89 million recorded a year ago. May deposits reflect revenue collected on actual sales reported by businesses required to file electronically from March 16 to March 31 and estimated sales from April 1 through April 15.

Figures released by the agency show sales tax revenue disbursed in May to Muskogee County totaled $573,594, up 30.10% from the $400,914 recorded for the same period a year ago. The county's use tax disbursement in May totaled $96,539, up 39.44% from the $58,467 deposited a year ago.

City Manager Mike Miller said the spike "is directly attributable to the timing of the stimulus" and the fact that many residents began receiving tax refunds. The American Rescue Plan Act excluded from taxable income the first $10,200 received from any unemployment insurance program during the 2020 tax year.

"That gave a lot of people more money for discretional spending at a time when money might have been getting a little tighter," Miller said. "We've marked that down for future years and understand we might not see that again, but obviously it was good for our local economy — good for businesses and good for Muskogee."

Sales tax revenue generated during the first 11 months of fiscal year 2021 totaled more than $24.73 million. That represents an 8.46% year-to-date increase from the $22.63 million deposited into city coffers during the same period a year ago.

Muskogee deposited use tax revenue in May totaling $373,264, a 28.82% increase from the $265,706 deposited a year ago for the same period. Use tax revenue is generated primarily by purchases of out-of-state goods for in-state use or consumption — city councilors appropriate $1.2 million annually for economic development purposes.