Sales Tax Holiday Impacted Cookeville Revenues, Awaiting State Answers

Cookeville’s sales tax revenue took a major hit during the state’s three-month Food Sales Tax Holiday, a loss of some $500,000.

City Manager James Mills said the revenue numbers from the first two months are exactly what the city had feared. Mills said that the law states that municipalities and cities like Cookeville are to be held harmless and not lose revenue during the holiday. Mills said there is concern about being made whole.

“We’ve had several conversations with the Department of Revenue to let them know what our concerns are,” Mills said. “They now have acknowledged that there is a problem, but how the city is made whole from this, that’s yet to be determined and that’s our concern.”

Last year’s sales tax holiday came in October over just one month. Mills said sales tax revenue decreased 25 percent. Mills said the loss impacts not just the city, but half of the money lost goes to the school system.

“If it’s statewide, can you imagine what kind of impact that is,” Mills said. “I’m sure the legislature had good intentions here, but it’s not having a positive impact on the cities and school systems across the state.”

Mills said part of the problem may be inaccurate revenue reporting. Last year, the city was not reimbursed the full $90,000, only the revenue that was reported. Mills said the miscalculation may be happening at the state or local level, but the issue is largely out of the city’s control.

“We’re hopeful that we’re reimbursed for what we lost not only this year, so far this year, but also last year and hopefully it’s corrected going forward, anticipating that the legislation wants to continue doing this in the future,” Mills said.

Mills said now he waits to see how the sales tax numbers come in for October, the final of three months in this year’s holiday.