Transaction privilege tax revenue distribution on track despite pandemic

Posted 6/24/20

The COVID-19 pandemic has slowed down many things for Arizonans, but distribution of tax revenues isn’t one of them.

As of May, the Arizona Department of Revenue had collected and …

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Transaction privilege tax revenue distribution on track despite pandemic

Posted

The COVID-19 pandemic has slowed down many things for Arizonans, but distribution of tax revenues isn’t one of them.

As of May, the Arizona Department of Revenue had collected and distributed $6.3 billion in transaction privilege tax revenues for fiscal year 2020, up 5.32 percent compared to the same period in fiscal year 2019, ADOR spokesman Ed Greenberg said via telephone June 23. That number reflects TPT sales reported through April; May’s numbers are not yet available. The fiscal year ends June 30.

“The Arizona Department of Revenue is responsible for administering the state’s tax system that funds Arizona’s priorities, including being the single point of administration and collection of state, municipal and county taxes. The department is a partner with 91 cities and towns and 15 counties to ensure tax revenue collection and the distribution systems are working effectively,” Mr. Greenberg said. “The Department of Revenue recognizes that due to COVID-19, this is a sensitive time for municipalities and counties in the state, and we take the responsibility of distributing tax revenue back to jurisdictions for local programs and services very seriously.”

ADOR uses a centralized distribution process in which TPT revenues are distributed to participating cities, towns and counties, as well as to state agencies, he said.

“The average time it takes for the department to consolidate the millions of dollars that come in every month and then distribute takes approximately seven days to finalize. The Department of Revenue provides weekly transaction privilege tax revenue distributions to Arizona cities and towns, and two revenue-sharing distributions per month for counties,” Mr. Greenberg said. “The tax distribution process has not been impacted by COVID-19.”

Though commonly referred to as sales tax, TPT actually is a gross receipts tax levied on businesses by the state for the privilege of conducting business in Arizona, Mr. Greenberg said. It differs from sales taxes collected in many other U.S. states as it is imposed upon the business rather than the customer. The business may pass the tax onto the purchaser, but the business owner is the party that remains ultimately liable to Arizona for the tax, he said.

In March, ADOR collected approximately $1.03 billion in TPT statewide, down about 5.88 percent from the same period in 2019. In April, it collected approximately $890,413,008 million statewide, down 11.38 percent from April 2019, Mr. Greenberg said.

A breakdown of TPT collected for West Valley cities those two months show large increases in Buckeye, El Mirage and Goodyear compared to 2019. Litchfield Park was down slightly.

March 2020 TPT collections

Avondale: $4,766,022, up 1.13% from $4,712,542 in 2019;

Buckeye: $3,688,873, up 19.94% from $3,075,629 in 2019;

El Mirage: $1,055,931, up 37.77% from $766,445 in 2019;

Glendale: $14,813,435, down 8.26% from $16,147,385 in 2019;

Goodyear: $7,107,898, up 20.17% from $5,914,712 in 2019;

Litchfield Park: $784,428, down 2.2% from $802,069 in 2019;

Peoria: $8,203,345, down 4.64% from $8,602,361 in 2019;

Tolleson: $2,352,045, down 4.26% from $2,456,649 in 2019; and

Surprise: $6,337,184, up 5.41% from $6,011,965 in 2019.

City of Phoenix TPT collected was $79,488,477 in March, down 9.78% from $88,104,103 in 2019, Mr. Greenberg said.

April 2020 TPT collections

Avondale: $4,215,199 up 1.44% from $4,155,179 in 2019;

Buckeye: $3,548,488, up 17.59% from $3,017,742 in 2019;

El Mirage: $909,889, up 23.96% from $734,006 in 2019;

Glendale: $12,448,465, down 14.53% from $14,564,667 in 2019;

Goodyear: $7,514,197, up 26.92% from $5,920,425 in 2019;

Litchfield Park: $707,229, down 0.27% from $709,163 in 2019;

Peoria: $7,143,753, down 13.11% from $8,221,593 in 2019;

Tolleson: $1,854,335, down 17.54% from $2,248,771 in 2019; and

Surprise: $5,872,999, up 10.10% from $5,334,259 in 2019.

City of Phoenix TPT collected was $66,118,996 in April, down 19.01% from $81,635,662 in 2019, Mr. Greenberg said.

Buckeye spokeswoman Annie DeChance said via email that March’s 19.94% increase and April’s 17.59% increase can be attributed primarily to a rise in construction ($354,890 in April and $375,121 in May), and retail sales ($236,139 in April and $392,548 in May).

El Mirage Deputy City Manager/Finance Director Robert Nilles attributed the city’s 37.77% March increase and 23.96% April increase to two factors. One-time revenues from commercial development in the southern part of the city and residential development in the northern part of the city account for 60% of each month’s increase, with the remaining 40% attributed to changes in state law regarding online/remote sales, he said.

Goodyear attributed its 20.17% March and 26.92% April increases to contracting (construction) sales tax, spokeswoman Corinne Holliday said via email.

“There’s a lot of growth happening right now in the city,” she said.

Statewide TPT activity by business category shows decreases nearly across the board both months, with hotels/motels (-53.81 in March/-78.66% in April), mining severance (-87.21% in March/ -42.59% in April), amusements (-53.53% in March/-72.03% in April) and restaurants/bars (-33.72 in March/-41.40% in April) particularly hard hit.

Business categories reporting increases included private car and pipelines (+3.9% in March/+33.49% in April), non-metal mining (+9.16% in March/+40.89% in April), contracting (+18.57% in March/+14.01% in April) and publishing (+4.28% in March/+22.45% in April).

For details on each category, see accompanying charts. Information on business categories by city was not available.

Kelly O’Sullivan can be reached at kosullivan@newszap.com or 760-963-1697. For up-to-date local reporting on all things COVID-19, Independent Newsmedia has created a webpage dedicated to coverage of the novel coronavirus: #AZNEWSMEDIA

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