Population trends and subsidies to blame for loss of sales tax revenue in Jackson

August 14, 2018

 

 

 

 

An outflow of retail businesses out of Jackson — helped partially by subsidies given by the state and by surrounding communities — has resulted in a 22 percent reduction of sales tax revenue to the city of Jackson in the last 15 years, according to an analysis of data by the Mississippi Independent, an affiliate of Mississippi Matters.

 

In 2003, the Mississippi Department of Revenue disbursed $34,877,395 to Jackson. Municipalities receive 18.5 percent of the state's 7 percent sales tax on most goods and services in the state. 

 

After reaching a high of $37,563,396 in fiscal 2006, Jackson's sales tax revenues plummeted to $28,946,815 in fiscal 2018 that ended July 1. Sales tax revenue represented 24.8 percent of the city's revenue in the fiscal 2017 budget.

 

Sales taxes collected in the Jackson metro area, which includes Hinds, Rankin and Madison counties, have increased 35.6 percent since 2003. The DOR disbursed $65,883,262 to municipalities in the three-county area in 2003. In 2018, that figure increased to $92,065,948. 

 

Jackson is getting an ever-smaller cut of that revenue. In 2003, the city's disbursements counted for 52.9 percent of the area's sales tax revenue. By 2018, that shrank to 31.4 percent. The rest of the Jackson metro area has grown from 47 percent of disbursements to 68.6 percent.

 

Looking at the table below, one can see where the revenue is going.

 

Madison got $1,383,656 from the DOR in 2003 and received $8,396,128 in 2018, an increase of 506.8 percent.

 

The DOR disbursed to Flowood $5,154,071 in sales tax revenue in 2003 and that figure ballooned to $11,969,914 in 2018. That's an increase of 132.2 percent.

 

Byram, which was incorporated as a city in 2009, has enjoyed a 115.3 percent increase in its sales tax disbursements from 2010. The city received $1,251,187 in 2010 and that figure jumped to $2,694,311 in 2018.

 

Brandon's sales revenues increased by 90 percent during the last 15 years, going from $3,120,866 in 2003 to $5,931,978 in 2018.

 

The DOR disbursed $3,316,889 to Richland in 2003 and that number increased to $5,743,348 by 2018, an increase of 73.1 percent.

 

In 2003, Pearl received $6,003,174 in sales tax revenue and by 2018, that number increased to $9,964,465, That's an increase of 65.9 percent.

 

Ridgeland's sales tax revenues added up to $8,612,829 in 2003. By 2018, the city received $13,448,739, an increase of 56.1 percent.

 

Clinton's sales tax disbursements from the DOR increased 40.4 percent from 2003 to 2015, growing from $3,304,987 in 2003 to $4,643,120 in 2018.

 

 

 

The reason for the downturn is the movement of retailers outside of the Jackson city limits. Sam's Club, Academy Sporting Goods and Best Buy moved their stores from Jackson's County Line Road to Madison.

 

Population trends play a role. According to data from the U.S. Census Bureau, Madison County has increased its population from 95,203 in the 2010 census to 104,618 in 2017, an increase of 9.88 percent. Rankin County's population has ballooned from 141,617 in 2010 to 152,080 in 2017, an increase of 7.38 percent. 

 

Jackson had a population of 173,514 in the 2010 census and its population has shrunk by 3.77 percent. Looking back further, the trend worsens. In 1980, the city had an all-time high population of 202,895 and the city's population has shrunk by 17.7 percent since.

 

In 1980, Rankin County had a population of only 69,427. That number has increased by 119 percent. Madison County was even less populated in 1980, with only 41,613 residents. Fast forward to 2017 and that number has increased by 151.4 percent.

 

Population trends aren't the only driver for sales tax revenues. Some of this movement of retailers is because of incentives, either from a defunct state program or via incentives offered by surrounding communities.

 

In Pearl, state tax incentives under a program called the cultural retail attraction incentive helped build the Outlets of Mississippi beside Interstate 20.

 

The state gave $24 million in incentives to the 35,000-square foot outlet mall, which opened in 2013 and cost $80 million to build. The way the program works is the state returns 80 percent of the sales tax revenue to the developer until the total reaches 30 percent of construction costs.

 

Each retail project in the program had to offer either $1 million worth of state-related art, historic markers or audio-visual equipment, or host space for the Mississippi Development Authority for 10 years for tourism promotion purposes.

 

Pearl's sales tax revenues, boosted by the new mall, increased from more than $6 million in 2003 to nearly $10 million this past fiscal year, which ended on July 1.

 

Jackson's sales tax revenues were steady at around $31 million annually when the outlet mall opened, but have dipped below $30 million in the last two years.

 

Luxury car dealerships are also leaving Jackson, thanks to generous tax increment financing incentives in Ridgeland. Jackson's northern neighbor provided a Jaguar/Land Rover dealership $2.3 million in TIF financing to relocate and gave a Mercedes-Benz dealership $3.3 million to relocate farther north on Interstate 55.

 

This story was changed to reflect sales tax disbursements to Byram, which became a municipality in 2009.

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© 2017 MississippiMatters

MississippiMatters is a news blog of cooperative writers, videographers and podcasters published by  The Well Writers Guild, a 501c3 devoted to mentoring Mississippi writers and to addressing uncovered or under-covered topics.  MississippiMatters focuses on offering creative "takes" on our state's culture, ideas, events and more.