Spending isn’t meeting growth expectations

By Bryan Gentry

Published: August 27, 2008

Consumer spending in Amherst County drives the economy in at least two ways: It keeps businesses afloat and helps fund the government through sales tax revenue.

A look at Amherst County’s sales from the first six months of 2008 shows that spending did increase, but not enough to meet the county’s expected sales tax revenue.

According to data from the Virginia Department of Taxation, Amherst County sales grew by 1.93 percent from January through June, compared to the same period last year.

Sales in the region as a whole grew by about 8 percent, led by Campbell and Bedford counties.

At the state level, the sales actually declined about 1 percent in the first half of the year.

Lynchburg College economics professor Joseph Turek said the comparison between the region and the state is encouraging.

“It appears that at least in terms of consumption spending, we are doing better than the state,” he said.

The increase in spending in the region, along with a steady job growth rate in Amherst and other counties, makes him “guardedly optimistic” about the region’s economy.

But for at least one Amherst County official, the emphasis might be on “guardedly.”

County Administrator Rodney Taylor said that even though sales increased, the sales tax revenue in the first half of the year was $32,000 below projections in the county’s budget.

Like other Virginia localities, Amherst County receives a cut of the sales tax paid by consumers, amounting to 1 percent of total sales.

He said the county projected little or no sales tax increase for this fiscal year, which ends June 30, 2009, and he doesn’t anticipate the budget being affected by falling revenue.

On a brighter note, Taylor pointed out that most of the shortfall in sales tax revenue was countered by a boost in meal tax collections.

The county collects a 4 percent tax on prepared meals, such as in restaurants.

The meal tax revenue was $21,000 over projections, Taylor said.

That increase was hard to explain, he said, because not many new restaurants have opened in the county. “We think what we’re seeing is an overall increase across the board for restaurants.”