Kingsport sales tax collections up 5 percent for fiscal year

Matthew Lane • Apr 14, 2007 at 11:06 AM

KINGSPORT - Sales tax collections in the Model City are up for the year, but not nearly as much as they were three months ago.

According to city finance records, sales tax collections for the first nine months of the fiscal year are up 5 percent over projections. Kingsport budgeted a 2 percent growth in collections for the year.

Kingsport's local-option sales tax collections have come in at $11.1 million through March, which is $275,000 ahead of expectations. Kingsport budgeted $14.24 million in local-option sales tax collections for the fiscal year.

The $11.1 million figure is $543,439 more than during the same time period in 2006, and $709,647 more than during the same time period for fiscal 2005.

Kingsport's regional sales tax collections through March are around $2.4 million. The city budgeted $3.13 million for the year. This tax amounts to a quarter cent added to the sales tax rate in the 1990s to pay the debt on the MeadowView Conference Resort and Convention Center.

While sales tax collections are up for the year, they are not up as much as they were three months ago.

According to a previous Times-News article, for the first six months of fiscal year 2007 Kingsport reported $7.13 million in sales tax - which was 9.67 percent above estimates. During the same time period in the previous year, Kingsport reported sales tax collections of $6.67 million. In 2005 the amount was $6.77 million, and in 2004 the amount was $6.5 million.

These figures do not include the actual Christmas holiday sales, but do include sales that took place on the state's sales tax holiday, which ran Aug. 4-6.

"I think it says there is a lot of pent-up demand for retail activity," said Jeff Fleming, assistant city manager for Kingsport. "We recently did some analysis of the Metropolitan Statistical Areas, and there is $7 billion in personal income in the Kingsport/Bristol MSA and around $4 billion in Johnson City's MSA."

Fleming said much of the retail attention in the past has been in the neighboring MSA, and Kingsport's sales tax increase is a natural "right-sizing" of the situation.

"There is disposable income. It's just that there hasn't been an opportunity to spend it as much in Kingsport," Fleming said. "Now that there are more retail options available, the sales tax collection numbers are indicating as people have the option to shop here, they will.

"Hopefully that will continue in momentum as future retailers consider our area and as pending projects continue to open up."

In 2004 and 2005 the old Kingsport Mall property, which sat mostly empty for years, was demolished and in its place East Stone Commons was built - a new 275,000-square-foot shopping complex with new stores and restaurants to the Model City, including PetSmart, Chili's, Hobby Lobby, Cootie Brown's and Ross Dress for Less.

Fleming said sales tax growth is fully reflective of the impact of East Stone Commons.

"But it does not include any of the impact we should see from Kingsport Pavilion," Fleming said. "We expect about $96 million in annual sales at the Pavilion, and about 70 percent of that should be new to the market. This is all very appealing in that we are beginning to see the fruits of our efforts and realize Kingsport's retail market potential."

Much of the building retail synergy is due to developers and retailers recognizing Kingsport's market potential, with the highest per capita and median income among the metropolitan statistical areas in the region, Fleming said.

"There were some in the community who were worried that the new retail growth would end up hurting established retailers who were already here in Kingsport," Fleming said. "But that's clearly not the case. This new development is filling demand."

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