Tuesday, September 13, 2016

Oconee County Had Modest Growth In Sales Tax Revenue During Period Of Rapid Commercial Development, Tax Distributions Shows

Neighbors Gained Also

Oconee County has experienced only modest growth in revenue it receives from sales tax in the last decade and a half even with significant expansion of its commercial inventory, changes in the county’s alcohol laws, and the opening of new restaurants.

The growth in sales tax revenue in Oconee County, in fact, is not so different from the growth experienced by Athens-Clarke County, which has lost some retail outlets to Oconee County and lost its exclusivity in selling alcohol in restaurants.

The growth in sales tax revenue in Oconee County also is similar to the growth in neighboring Barrow County.

Oconee County did see a year of especially strong growth in sales tax revenue in 2014, following the opening of Epps Bridge Centre, but that increase followed a year of nearly zero growth and was mirrored by strong growth in Athens-Clarke County and Barrow County.

The rate of growth Oconee County experienced from 2013 to 2014, when Epps Bridge Centre opened, was not sustained the following year.

The data suggest that at least some of the sales in new outlets in Oconee County have come at the expense of existing stores in the county and that Oconee County’s fortunes are tightly linked to those of the surrounding counties.

That conclusion is an important one as county leadership invests taxpayer dollars building infrastructure in an effort to lure even more retail outlets to the county.

Sales Tax Distributions

These findings come from an analysis of sales tax revenues received by the three counties from 1999 to Aug. 31, 2016.

The Georgia Department of Revenue provides on its web site distributions of county sales tax revenue on a monthly basis going back through 1999.

I downloaded those data for Oconee County, Barrow County and the unified government of Athens-Clarke County because the three counties share the quickly developing SR 316 corridor.

I downloaded monthly distributions for the county’s Special Purpose Local Option Sales Tax as well as for the Local Option Sales Tax.

Discrepancies Exist

Both taxes are calculated at 1 cent on a dollar for purchases, including groceries and food and beverages sold in restaurants.

The revenues produced by the two taxes are similar but not identical, and the Georgia Department of Revenue justifies the discrepancies in terms of distinction between point of sale and point of consumption.

Oconee County residents pay an additional 1 percent sales tax for education, and that tax is referred to now as an Education SPLOST.

The county approved its first LOST in 1982, its first SPLOST in 1985, and its first Education SPLOST in 1997.

LOST continues without renewal, while the SPLOST taxes are renewed on a fixed cycle. Oconee County citizens will be voting on the Education SPLOST renewal in November.

All Georgia residents pay an additional 4 percent sales tax to the state.

Monthly Variation

Sales tax revenues received by the county, called distributions, vary wildly by month, as Chart 1 shows. (CLICK ON THIS AND SUBSEQUENT CHARTS TO ENLARGE THEM.)

Overall, sales tax revenue has been increasing.

Some of the fluctuation is seasonal, but other variations are hard to explain.

As Chart 2 shows, the county had a very strong distribution in January, which actually represents the December, or holiday, sales. Distributions are delayed by a month.

The county also had a big distribution in April, representing March sales. The April distribution was followed by four months of lower and even declining distributions.

The Georgia Department of Revenue acknowledges that some distributions represent delays in collections and accounting.

Quarterly Figures

Chart 3 shows the growth by quarter from 1999 to 2016, ending on June 30 of this year.

Quarterly figures include the periodic distributions from the state on a pro rata basis of sales tax collected by the state that does not include information on the residence of the purchaser.

The chart shows the still somewhat choppy growth in sales tax revenue from 1999 to the end of 2006 and the decline as the national economy suffered the collapse of late 2008.

The local economy, as well as the national economy, recovered in 2010. (Not all of the data points are labeled in the chart.)

The chart shows the recovery building in the most recent quarters.

Yearly Figures

The county operates on a fiscal year running from July 1 of a year to June 30 of the following year, but the data in Chart 4 and those that follow are by calendar year.

It is easier to tie events to calendar year than to fiscal year.

Chart 4 shows clearly that Oconee County is the smallest of the counties in terms of sales tax distributions, being dwarfed by neighboring Athens-Clarke County and even overshawded by Barrow County. Oconee County also is the smallest in terms of population.

In 2015, Oconee County brought in $6,510,879 in SPLOST revenue, compared with $9,450,246 in Barrow and $22,214,098 in Athens-Clarke County.

What is more important is the similarities of the trends in sales tax revenue growth and decline in the three counties.

Clearly, the trends move in tandem, making the case for examination of the overall retail market rather than solely of its parts.

County Focus

Oconee County officials do not discuss sales tax distributions in regional terms, as the video at the bottom of this post indicates.

Chart 5, which has a smaller range on the vertical axis than Chart 4, and thus exaggerates growth, offers the single-county focus county officials prefer.

University 16 Cinemas in the Epps Bridge Centre opened its doors in May of 2013, and it was followed by the opening of the Gap, Old Navy and Banana Republic stores later that year.

The following year–2014–Best Buy, Dick’s Sporting Goods and other stores opened, and the major parts of Epps Bridge Centre filled.

Chart 5 suggests a greater impact of Epps Bridge Centre than does Chart 4.

Many of the stores coming to Epps Bridge Centre left Athens-Clarke County, but it is hard to see in Chart 4 compelling evidence that Epps Bridge Centre made a significant difference to either county.

The small gains in Chart 5 get lost in the overall trends in Chart 4. It also is clear that the recovery and growth in tax revenue was underway when Epps Bridge Centre opened.

Inflation Adjustment

A limitation of a focus on SPLOST distributions as released by the Georgia Department of Revenue is that they are nominal dollars, that is, not inflation adjusted.

Products go up in price, and the tax goes up with them.

The growth is not real, however, as the counties pay for services, such as police protection, road maintenance and water and sewer provision, in dollars that are impacted by inflation as well.

Chart 6 shows the distributions adjusted for the U.S. Bureau of Labor Statistics Consumer Price Index for Urban areas. I used 1999 as the base, since that is the beginning year for these charts.

Chart 6 makes it clear that the “gains” realized by the county from commercial sales are much less in inflation-adjusted dollars than in nominal, or non-adjusted, dollars.

Athens-Clarke County actually received less real income in 2015 from SPLOST and its other sales taxes than it did in 1999.

Barrow County and Oconee County experienced growth because they started out with fewer dollars in 1999.

Oconee County collected a little more than $2 million in inflation-adjusted dollars in 2015 than it did in 1999. That compares with an increase of just less than $4 million in non-adjusted revenue.

The $2 million is not insignificant, but the inflation adjustment puts into perspective growth in county revenues from sales taxes.

Nominal Growth

Chart 7 switches back to nominal, that is, non-adjusted, revenue, since that is the way the county talks about its sales tax revenue.

The chart shows significant gains in Oconee County from 2013, when Epps Bridge Centre opened, to 2014, when the shopping center really began to fill.

The growth dropped off in 2015, even though more stores continued to open.

Chart 8 shows that Barrow County and Athens-Clarke County also gained during that same time period, as was reflected in Chart 4.

All three counties saw less growth in the following year, 2015.

The final chart, Chart 9, is again based on nominal, or non-inflation adjusted, dollars.

It shows that Oconee’s SPLOST revenues grew by10.5 percent in 2014 over 2013.

Barrow and Athens-Clarke County saw smaller growth rates.

But the base for Athens-Clarke County, and, to a lesser extent, for Barrow County was larger, making comparisons in terms of rate of change difficult.

What It Means

Oconee County’s sales tax revenues grew from 1999 to 2015, at a time that the county had expanded significantly its commercial base.

Epps Bridge Centre came online late in the period, with the assistance of the county, and the county changed its alcohol laws with the intent of encouraging the growth in the number and type of restaurants.

The county issued its first beer and wine licenses for restaurants in 2008, and in 2014 liquor by the drink was allowed in restaurants.

The expansion of retail outlets and changes in the alcohol laws seem to have allowed the county to capture some of the commercial growth in the metropolitan area. It is not clear that the expansion or changes in the law caused the growth.

The relatively smooth growth in Oconee County and the growth in neighboring counties suggest that some of the Oconee County growth was at the expense of existing businesses in the area.

Because the Georgia Department of Revenue does not release data on the store level, it isn’t possible to say that with certainty.

Future Growth

Oconee 316 Associates and Frank Bishop, the developer of Epps Bridge Centre, received approval last month from the Oconee River Soil and Water Conservation District for its Erosion and Sediment Control Plans for Epps Bridge Centre II and Epps Bridge Centre III.

Over the weekend, construction equipment was assembled on the site, ready to begin clearance for a 54-acre expansion of Epps Bridge Centre across the Oconee Connector from the existing shopping center.

Oconee County has sold $4.3 million in bonds to build the roadway that will open up the additional land for development.

County commissioners have justified the investment on the grounds it will bring in new sales tax revenue.

How much of that revenue will come at the expense of other businesses in the county is an unknown.

Also unknown, and now unknowable, is how much growth in SPLOST and other sales tax revenue the county would have received even if it hadn’t spent the $4.3 million to entice Bishop and other developers to build new commercial space.


Wes Geddings, Oconee County finance director, gave the fourth quarter financial report for Fiscal Year 2015-2016 at the meeting of the Oconee County Board of Commissioners on Aug. 30, 2016.

The report was for the months of April, May and June of 2016, but, since that was the final quarter of the fiscal year, Geddings also commented on the entire year.

He said that the sales tax revenue had increased 5.61 percent over the previous fiscal year. By context, it seems he was talking about SPLOST rather than all sales taxes combined.

The calculation of a rate of 4.9 percent in Chart 9 is based on the calendar year, not the fiscal year, and compares 2015 with 2014 for SPLOST.

As noted above, Geddings does not make comparisons with neighboring counties, make inflation adjustments, or offer explanations for the growth.

OCO: Fourth Quarter FY 2016 Financial Report from Lee Becker on Vimeo.


rightway1974 said...

They only like to talk about the data that fits their agenda. You dont honestly believe they want the peasants to know the real truth of the matter?

Anonymous said...

After the unethical, sham report presented by Economic Development Director J.R. Charles regarding the auto dealership but actually produced by Shaun Fagrell, general manager and partner of Mercedes-Benz of Athens, frankly it's difficult to accept any data or reports from the Melvin Davis-led county administration as accurate or trustworthy.

County Administrative Officer Jeff Benko told me in a telephone conversation on July 27 that he requested the report by Economic Development Director Charles on behalf of Rick Waller, chair of the county’s Industrial Development Authority.

Benko told me that he “assumed” that Davis also had an interest in the report. Davis is a member of the IDA.
I had earlier filed an open records request for documents and correspondence from Charles, and he provided notes indicating he had obtained much of the information in the report from a telephone conversation with Fagrell, but he did not indicate the date of that call.
Charles produced the report on June 3 and distributed it that same day to Fagrell, Williams, the members of the IDA, Benko and the Commissioners.
The document was not placed in the rezone file at the Oconee County Planning Department or put on the county’s web site, which would have made it available for analysis by those who were opposed to the rezone and spoke against it at the BOC hearing on June 14.

Anonymous said...

Lee, I find it difficult to believe your argument given the fact you interviewed no subject matter expert on economic growth and also because you display your misunderstanding of economic growth in the following statements...

"How much of that revenue will come at the expense of other businesses in the County is unknown."

Think back to Economics 101: the economy is not a fixed sum where money is a scarce resource and players fight for a small slice of a finite pie. Economies grow in size as value is built either by the creation of new markets or by innovation. The Epps Bridge area is an example of a new market that draws in new buyers and sellers (buyers, by the way, who may not actually live in Oconee County or would spend money in Oconee County were it not for Epps Bridge.) Downtown Watkinsville is not likely to suffer as a result of new growth due to the influx of new players in the market, but your statement presupposes that this scenario is inevitable. This logical fallacy and misportrayal of economic theory is something your readers incorrectly count as fact.

"Also unknown... is how much growth in SPLOST and other tax revenue would have received even if it hadn't spend (sic) the $4.3 million..."

Again, you are building Ambiguity into your argument and assuming the economy would suffer as a result of new investment, but the opposite is true. It is actually easy to show the opportunities missed if the county took no action. Assume the County did not spend the money to build the road... using corporate earnings disclosures from Costco and multiplying it by the site plan Bishop provided to the Planning Commission, we can calculate that the Costco alone would generate $1 million per year for LOST, SPLOST, and ESPLOST each (or $3 million cumulatively.) Using this example, the road would be paid for in about 4 years, and the new market activity in the development would increase the economic pie for Oconee County. If the county didn't invest, that $120 million in potential sales, plus the potential sales from other retailers, would never exist... neither would the property tax, New jobs/wages, or any other benefit resulting from the development.

Here is the math... $820 in sales per square foot reported by Costco public disclosures multiplied by 146,290 square feet for the largest building in the plan submitted by Bishop = $120 million in sales per year. One Percent sales tax on $120 million = $1 million in sales tax revenue.

Economies are built as a result of cooperation between the private sector and the government, and there are many examples throughout American history to prove it (see Eisenhower Interstate System.) Using the upcoming Epps Bridge development as an example of what would be lost without a partnership, it is easy to assume that commercial sales (as well as job opportunities) would have declined in Oconee County after the Great Recession were it not for some measure of public investment.

Lee Becker said...

I thank Anonymous for the lengthy comment.

I believe it is unknowable how much impact new development will have on existing businesses. This does not assume that no new spending will take place. It only acknowledges that not all spending has to be new.

I introduced "ambiguity" (your word) into the assertions about the impact of the county's investments because I believe the data suggest some uncertainty is in order.

People can interpret the data differently. I presented the data and suggested that an interpretation other than the one you offer is possible.

Thanks for providing your interpretation.

Thanks, too, for pointing out the typo. I corrected it.


Anonymous said...

Anon 11:12 is full of horse manure!

$120 million in sales per year for a Costco in Oconee County??? Not going to happen. I doubt any Costco in Georgia grosses $120 million per year in sales. If so, maybe in the most populated parts of metro Atlanta.

But $120 mil for a Costco in Oconee?? I find it difficult to believe your argument given that you a skewing data to support your pie in the sky prophecy.

But hey, Melvin promised us suppliers and jobs as the county gave Caterpillar $20 mil in handouts.
Funny we're in a very conservative Republican county, where many don't believe in welfare and medicare for low-income citizens, but $4.5 million in Oconee County taxpayer money for an Atlanta millionaire passes without the blink of an eye.

Anonymous said...

Let me get this straight Anon 11:12 (or more likely a Frank Bishop or Jamie Boswell surrogate):

Costco is going to turn down $120 million in annual sales if the county doesn't build a $4.5 mil road?

Frank Bishop can build the darn road.

Anonymous said...

Anon said:

Politicians in concert with developers always preach that growth (unabated usually) is required to expand tax base. Ha! Wherever has it happened that local taxpayers pay less thanks to these 'developments'? Uh, never. We all (citizens) pay for the infrastructure, traffic, lost time, noise, bad air, congestion, and on and on. Do we really believe that all this development pays for itself? We pay for it, and not just in dollars and cents. Are property taxes ever less in large, prosperous, suburban areas? Never are. I suspect many Oconee residents couldn't even afford the property taxes folks around ATL pay, much less the cost of that property. They tell us we must 'grow or wither'. Methinks it's the revenues of the politicians and developers that wither. We'd be fine.

outsiderlookingin said...

Why in the heck do you keep electing the same ole crowd then. All you people want to do is blame Melvin Davis or Frank Bishop for all your woes, try something different for a change, there is enough outside liberal blood that's moved into the county for that change.

Anonymous said...

Unfortunately or fortunately as the case may be the liberals don't run for office in Oconee.

Zippity said...

Great discussion - very interesting.

rightway1974 said...

Tax payer funds should never be used to pay for any item that a non-govt. owned entity requires or wants. My property requires the same amount of services that it required when my family first purchased it in the 1800's. My property tax bill is 10000% more now than it was then. All of this development has done nothing but increase property taxes and erased a once nice place. The majority of residents in this county do not know what it used to be like.

outsiderlookingin said...

Is your property still worth the same as it was in 1800's, its probably worth about 10000% more, get the correlation?

rightway1974 said...


My property is used for the same thing it has always been used for. So why should I have to pay for services to benefit others that I dont use or require? The average home in a subdivision or small lot, does not pay enough in taxes to cover the services they demand.