An adage that has sprung up during the pandemic is that we may all be caught in the same storm, but we are not all in the same boat.
A good example of this is the differing financial health of Santa Cruz County as a whole and the town of Patagonia.
The county, which was bracing for a 25% drop in sales tax revenue due to the pandemic, has instead seen an increase in revenue. County manager Jennifer St. John credits this to three factors.
“In April and May people got their stimulus checks,” she said. “They weren’t going anywhere so they spent it locally. People did a lot of home improvement projects. We really saw those go up.”
She credits the June uptick in sales tax revenue to the SR 189 construction project. This project, to improve Mariposa Rd from the International Border with Mexico to Grand Avenue in Nogales, has been a boon to the county, as state law requires that sales tax for any material used in the project is paid to the community in which the construction is taking place, rather than where the material is purchased.
The third factor in the increase in tax revenue for the county is the growing popularity of internet sales.
“We expected an uptick in internet sales,” St. John said.
Following a Supreme Court ruling in 2018, and adoption of the ‘Wayfair Act,’ named for a popular internet site, the state, beginning last fall, requires internet retailers to collect sales tax based on the locality of the buyer.
According to St. John, sales tax revenue is ahead of where it was last year at this time.
“We were pleasantly surprised, but we don’t know how long it will last,” she said. “We need to understand that we don’t know what normal will look like because the pandemic has had a devastating effect on our hospitality industry, restaurants, bars, gyms, and tourism to some extent.”
In Patagonia, the picture is quite different.
“Our town tax revenue has been reduced by at least 50%,” Town Manager Ron Robinson said. In 2019, the town collected $373,000.
“This year we are on track to be half of that,” he said.
Sales tax is important to Patagonia because the town gets no revenue from property tax. There seems to be no help coming from the federal government, either. The fact that the second coronavirus aid bill has been held up for months in Congress leaves little hope that local governments will receive aid anytime soon.
He has seen a recent increase in sales tax revenue, which he credits to people doing more online shopping.
“I’m trying to make an awareness campaign,” he said, to encourage people to shop online. “We don’t get any tax if you are shopping in Sierra Vista.”