While Allen County's financial situation is healthy right now, a perfect storm is in the works that could put constraints on the Sheriff's Office, the court system — virtually everything funded by county government.
The storm is fueled by the county's growing reliance on sales tax revenue, which is occurring at the same time consumers are changing their buying habits.
Last week, Commissioner Jay Begg reported that 60 percent of the revenue in Allen County's budget is now being funded by sales tax. A large chunk of that sales tax revenue comes from retailers who are struggling to post the sales figures of year's past. A key factor in their struggles is the comfort level more people are having with on-line shopping, where almost anything and everything is available for purchase, and in most states comes without the need to pay sales tax.
That's bad news for county governments across Ohio who are relying on healthy sales tax figures at a time when they are anything but such.
Jeff Sprague, president and CEO of the Allen Economic Development Group, along with local retailers say the fix is easy — a federal sales tax should be enacted with the money generated being returned to county governments. They call that “balancing the playing field.” The problem is lawmakers like U.S. Rep. Jim Jordan call it a “new tax” and will have nothing to do with it.
We, too, seldom see the need for new taxes. However, one could argue a national sales tax is not really a new tax, but merely the extension of an existing tax. It could also be called the elimination of an unintended tax cut.
What cannot be disputed is that county governments across Ohio shouldn't be depending on sales tax for financial stability. Not when we're seeing the following:
• The last time a mall was built anywhere in the United States was in 2006.
• Sears Holdings Corp. plans to close as many as 120 stores and record up to $2.4 billion in quarterly charges after another bad holiday showing, raising fresh doubts among analysts about the future of the middle-market retailer.
• Macy's announced in January that it expects to lay off approximately 2,500 employees and close five stores.
• J.C. Penney has spent the last three years in the headlines for all the wrong reasons — doing away with coupons and sales, and abandoning its traditional house brands in favor of more fashion-forward collections. Sales tanked and the company reversed many of the issues. Now the big question is whether the customers will come back
It's all a sign of a retail market that is down-sizing. Now is not a good time to be depending on its tax revenue.