BLOOMINGTON -- More people eating out and buying clothes are helping lead to a better-than-expected rebound in state sales tax revenue for Bloomington and Normal city governments, new data show.
State sales tax revenue — a key benchmark of local economic activity — rose 1.5 percent in the city of Bloomington and 3 percent for Normal in their 2011 fiscal years, which ended this past spring, early data show.
For both, it was the first annual increase in state sales tax collections since the recession took hold — and better than their projections.
Some revenue streams continue to lag, including income taxes strained by joblessness. But in Bloomington, where state sales tax revenue fell from $14.1 million in 2006 to $12.7 million last year, any turn is welcome news.
“That’s not dipping down anymore. That’s a real positive,” said Tim Ervin, the city of Bloomington’s finance director.
Other highlights from the unaudited fiscal 2011 data:
• In Bloomington, the 2 percent food and beverage tax brought in $3.8 million last fiscal year, a slight increase. Despite the recession, this stream has risen fairly consistently in restaurant-friendly Bloomington.
• In Normal, the 6 percent hotel/motel tax brought in $997,615 in fiscal 2011, up 17 percent, in the first full year that included receipts from the new Marriott Hotel and Conference Center. By contrast, Bloomington’s hotel/motel tax brought in $1.4 million, down 5 percent from 2010 and $218,500 below expectations.
• State income tax revenue — determined by a state formula that weighs population, as well as employment trends — fell in both cities by about 1.8 percent. In Bloomington, the $5.8 million collected is down from a recent high of $6.9 million in 2008. In Normal, its $3.9 million lags the $4.6 million from fiscal 2008 and 2009.
The recession’s sap on revenue led Bloomington, in part, to cut its workforce and increase its own locally set sales tax rate. And with a general reluctance to raise property taxes colliding with the cost of doing business generally rising, Bloomington is increasingly reliant on sales taxes, said City Manager David Hales.
The fiscal 2011 growth shows the local economy continues to improve and bodes well for the future, he said.
“I would’ve been very concerned to see (state sales tax revenue) drop over the prior year,” Hales said.
Normal’s sales, income and food and beverage tax revenue beat budget projections, Finance Director Andrew Huhn said. Its general fund ended fiscal 2011 with a $1.6 million surplus and a 10 percent reserve level.
In Bloomington, preliminary numbers indicate the city ended fiscal 2011 with a $4.8 million surplus — half from better-than-expected revenues, half from lower expenditures. Anticipating that, city officials previously decided to use $3.1 million of that for road resurfacing and its share of the new eastside Gaelic Park.
The rest will raise the city’s reserves to about $11.4 million, slightly above its target of 15 percent of general fund expenditures. While welcoming the good news, Hales said there is a pent-up demand for costly infrastructure — from roadwork to new vehicles and other capital projects — that can eat up any overage.
Ervin noted that the City Council recently approved the purchase of a $524,500 fire engine to replace an aging vehicle. The 1.5 percent increase in state sales tax revenue for fiscal 2011 equates to about $188,173.
“That fire truck absorbs that — and more,” Ervin said.
Reporter Ryan Denham can be reached at twitter.com/ryanpantagraph