TAX NEWS - JUNE 2010

Rhode Island Tax: Sales tax, registry revenues improving despite flood

PROVIDENCE — Rhode Island's sales tax and motor-vehicle registry revenues continue to improve — withstanding even the spring flood that deluged some communities.

Shoppers apparently shifted some spending in April to locales unaffected by the late March rainstorm, state tax revenues indicate.

Businesses have until the middle of a month to turn over tax receipts from the previous month. With late payments and other disruptions, it can take weeks after a particular month ends for state officials to discern the results for that period.

Revenues for May 2010, which reflect sales tax and registry receipts for the month of April 2010, show the state took in $63.3 million, up 3.5 percent from the $61.2 million collected in April 2009.

Revenues for April 2010, which reflect receipts for March, show the state took in $65.1 million, up about 3.9 percent from the $62.7 million collected in March 2009.

At their November 2009 revenue conference, state officials estimated March sales-tax collections of $59.6 million and April collections of $60 million.

March and April are swing months for collections as people switch purchases primarily from clothing to home remodeling and outdoor projects. Clothing is untaxed in Rhode Island.

Shortly after the flood hit, Paul Dion, chief of the state Office of Revenue Analysis, said "We are anticipating ... a transference not necessarily a loss, per se."

Some spending apparently moved to Providence Place mall, which seemed to benefit from the damage done to rival shopping center Warwick Mall. Warwick Mall has yet to fully reopen since the March 30 storm.

"It makes logical sense that if a major competitor is closed you're going to pick up some of that business," said Will Malone, general manager at Providence Place. "I wish I had a way to know how much."

Providence Place generated $1 million in sales taxes in March and again in April. The March results were 20.1 percent above March 2009 and the April results were 16 percent above April 2009.

The Providence Place revenue is added to the monthly statewide totals.

Sales tax and registry revenues have for months been running ahead of the November 2009 estimate. The trend prompted state officials in May to revise upward their estimate for those collections.

The revenues are running ahead of even the latest projection, Dion said.

In November 2009, officials expected the state would take in $751 million through the end of June 2010. In May, officials revised that up to $787.5 million.

At this point, revenues top the latter estimate by nearly $9 million, Dion said.

"I don't think we lost any steam," Dion said, as a result of the March flood. "It doesn't look like it's had a discernable negative impact."

The numbers suggest some people simply shifted the timing and location of their spending after the water receded and also that post-flood repairs spurred some taxable spending.

"We take no solace in the fact that people had to take serious impacts for us to be ahead," Dion said. "We're lucky."