Audit provides city big sales tax boost
Published 5:00 am Friday, October 24, 2008
A half-million dollar audit assessment on a Brookhaven businessby the Mississippi State Tax Commission accounts for roughly 60percent of a whopping 42 percent jump in sales tax numbers forSeptember 2008, officials said.
According to Brookhaven’s September report, the city received acheck from the state Tax Commission for 574,985.44, an increase ofabout $170,000 over September 2007’s $404,870.83. The significantincrease raised eyebrows until the reason for it was learned.
“What it was was a very large audit that processed forBrookhaven, and it has not been paid yet,” said State TaxCommission Director of Communications Kathy Waterbury, adding thatthe assessment covers a 37-month period. “We’ve advised the city tobasically treat that as an advance on next month’s diversion.”
City Clerk Mike Jinks said the state tax commission contactedhim Thursday morning to tell him of the reason for theincrease.
“They went ahead and paid us the percentage on that assessment,and they said that represented about 60 percent of the increase,”Jinks said.
Unless the business – which was not identified – pays the taxdollars it owes based on the audit, state tax officials told Jinksthe next check will have that money taken back out of it.
“It’s a pretty substantial amount that they gave us inanticipation that (the state) would have been paid, so if theydon’t, it comes out of our next check,” Jinks said. “He told methey would reverse the diversion until the assessment is paid.”
Waterbury said the amount was paid because sales tax diversionchecks to municipalities automatically process, but that it wasfound and would be corrected manually.
Before the audit information was revealed, Brookhaven officialshad speculated the significant increase was due to HurricaneGustav. Waterbury, though, attributed much of the increase to thestate advance.
“You can suggest that part of this increase is Gustav, but theaudit was the predominant piece of the increase,” she said.
She said the business may end up paying the amount inincrements, at which point the city would also be paidaccordingly.
Brookhaven’s September sales tax check led 21 cities of similarsize, including topping the sales tax total in Oxford, whichusually leads the list while school is in session. Oxford’s totalwas $557,826.27.
For September, Brookhaven vaulted to 14th in the state in salestax rankings.
“We had an excellent month,” Mayor Bob Massengill said. “Whenyou top Oxford and school is in session, that’s reallysomething.”
Despite the tax commission issues, Gustav still had a positiveimpact on sales tax totals. During Hurricane Gustav, people fleeingLouisiana and the coast passed through Brookhaven, and many evenstayed in the city for the duration of the storm.
“When Gustav was here, and we had hotels full and we had peopleeating and fueling up and everything else,” said Jinks.
City officials are still optimistic at the difference betweenBrookhaven’s totals for this year and last year’s $404,870.83.Jinks said the sales tax also went up in a similar fashion duringHurricane Katrina.
“It did jump that much back during Katrina,” Jinks said. “DuringKatrina they were here a little longer.”
In 2005, October’s total was roughly $464,000, which was closeto a 25 percent increase over the same month in 2005, which totaledaround $345,000.
Massengill said Tuesday night as long as Brookhaven’s sales taxremains strong, the city will be in good shape financially in thesetimes where many cities in Mississippi have found themselves intight situations.
Brookhaven topped McComb, which also sits along the I-55corridor affected by Gustav’s exodus, though their $467,474.10 wasup quite a bit from last year’s $449,766.94. Natchez showed a risefrom 2007’s $424,187.06 to 2008’s $466,074.36.
But officials are still urging residents to keep their salesdollars at home.
“The upcoming months will surely add to these numbers, whichonce again emphasizes the importance of shopping locally,” saidBrookhaven Lincoln County Chamber of Commerce Executive VicePresident Cliff Brumfield. “Please keep the local merchants at thetop of your list when you’re doing your holiday shopping.”
And Massengill reminded the board that prudence is the betterpart of valor when it comes to the budget.
“One good month does not a year make,” he said. “We need toremember to stick with the budget, because there are plenty oftowns that are in trouble, but we are blessed that we are not.”
Massengill also added some humor to the meeting by posinganother theory for the sudden rise in sales tax.
“I told you all once we got that Waffle House in here, we’d bein good shape,” he said with a laugh.