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Sales tax collections dip with economy, meaning less money for county

Karin Bennett helps Don Mitchell of South Carolina with his purchase Tuesday at the Cornerstone Shop and Gallery in Lake Geneva. Bennett says she sees the sales tax as a good thing because of the amenities that revenue is able to provide for local communities. Terry Mayer/staff.

By Margaret Plevak

Staff Writer

ELKHORN — One half of 1 percent doesn’t sound like much, but multiplied by thousands, it can fill county coffers.

And in the case of Walworth County’s county sales tax, it has.

In addition to the Wisconsin sales tax of 5 percent, the county also imposes a .5 percent sales tax on all retail purchases, which provides additional revenue to fund county programs.

But in a sluggish economy, tax collections drop off as well, making tight budgets even tighter.

From 2005 to 2008, Walworth County sales tax revenue increased annually, growing from $7.30 million to $7.81 million. In 2009, when the economy entered a downturn, sales tax revenue dropped to $6.95 million.

When an economy slows, the domino effect occurs. Unemployment grows. Job losses mean less discretionary income, which, in turn, means less spending. Ultimately, that reduces sales tax revenue for the county.

In Walworth County, visitors — both families on vacation and business travelers attending conferences — play a large part in the local economy and hence, sales tax revenue. The county ranks seventh in the state in tourism spending, according to a 2009 report from the Wisconsin Department of Tourism.

Last year’s tourism survey reveals travelers to Walworth County spent $370 million in 2009, compared to $416 million in 2008. That’s an 11 percent dip in tourism spending.

Now, in mid-August, summer visitors are still arriving and fall is more than a month away, so it’s too early yet to determine how successful 2010 has been. But Kathleen Seeberg, executive director of the Walworth County Visitors Bureau in Elkhorn, is cautiously hopeful.

“I believe that tourism is picking up slowly,” she said. “People are waiting until the last minute to come.”