Growth in taxable sales through June in Region 2000 outpaces statewide numbers

By Bryan Gentry

Published: August 24, 2008

Consumers drive the American economy. So how are they doing behind the wheel in Central Virginia?

A look at taxable sales in the Lynchburg region during the first six months of this year show that Region 2000 is faring better than the state as a whole.

All but two localities in the area saw positive growth in sales when compared to the same period last year, and overall in Region 2000 taxable sales were up 8 percent. Statewide, taxable sales during the first half of 2008 were down 1 percent from the same period in 2007, according to sales figures from the Virginia Department of Taxation.

That’s enough good news to have a Lynchburg College economics professor “guardedly optimistic” about the local economy.

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

The sales figures from the Virginia Department of Taxation also show that the balance of retail power in the region has changed slightly.

Lynchburg is still king of commercial activity, with more sales than the region’s other localities combined. But Campbell and Bedford counties made significant gains early in 2008, while Lynchburg’s sales rose by just under 3 percent.

“I think we’ve seen the development of some commercial opportunities in both Campbell and Bedford County that probably removed some purchasing power” from Lynchburg, said City Manager Kimball Payne.

Campbell County Administrator David Laurrell pointed out that several large retailers — including Wal-Mart in Altavista and Old Navy, Kohls, and Ross Dress for Less at Wards Crossing West — all opened in the last half of 2006.

They have now had time to build customer traffic and increase sales, he said.

He pointed out that more stores opened at Wards Crossing West in 2007. He said he expects sales to continue increasing because “those stores haven’t gotten fully ramped up yet.”

Six years ago, when the county did not have many retail developments, it started a “concerted effort” to increase retail activity, Laurrell said.

That effort is starting to pay off. “It bodes well in terms of Campbell County being able to support that retail and commercial growth,” Laurrell said. “I think it also reflects positively that we established (Wards Crossing West) as a growth area of the county.”

Payne said Lynchburg was able to keep hold of the region’s retail activities for longer than many cities, because it had enough open space for developments like the Plaza and later, River Ridge mall.

But that’s no longer true.

“We don’t have a lot of green space out there to go out and build new shopping centers on,” he said.

That’s what makes redevelopment of downtown and the addition of a 14-screen Regal movie theater at the city’s mall so important, Payne said.

“We need to continue, to the extent that we can, … to be the commercial hub of the region.”

LYNCHBURG

Lynchburg saw an increase in sales during the first half of 2008, but it wasn’t enough to make up for a drop in sales in the last half of 2007.

City Manager Kimball Payne said the city’s sales and use tax revenue for the fiscal year ending June 30 was $14.3 million, a $200,000 drop from the year before.

But he said the city received enough taxes in other categories to make up for the lost income. The city got $1 million more telecommunications tax than projected, for example, and the meals tax income has continued to rise.

BEDFORD COUNTY

Sales in Bedford County were up $54.2 million, or 38 percent, in the first half of 2008, though the jump is not a continuing trend.

County Administrator Kathleen Guzi said most of the increase was from one business being paid for a long-term project. State law does not allow the county to name the company.

Not counting that sale, the county saw sales tax revenue slow from April through June, and sales tax revenue was up about 7.5 percent for the fiscal year ended June 30, Guzi said.

The slower sales increase from April through June might be connected to slower growth, she said. The county this year has seen a drop in residential building permits.

She said the county anticipates sales tax to continue growing at a slow pace.

CAMPBELL COUNTY

Although Campbell County sales increased 12 percent in the first half of 2008, David Laurrell, county administrator, said the sales tax revenue alone is not enough to pay for increased services.

Sales and use tax revenue was only up about 5 percent for the fiscal year ended June 30, Laurrell said.

That would pay for continuing the county’s current services, but not for the increased services some citizens are asking for, he said.

“Those are the things that we can’t keep up with,” he said.

The county has seen more requests for water and sewer service, animal control, trash collection, and law enforcement involvement in neighbor disputes, Laurrell said.

BEDFORD CITY

Sales in Bedford city dropped 2.4 percent, just over $1 million, in the first half of the year. Elizabeth Berry-Mosley, the city’s economic development director, said the change doesn’t signal a particular problem for the city.

“I think you’re seeing a slowed economy,” she said. “I’m not sure that there’s anything unusual going on here.”

She said the city had a net gain of businesses in the past year. Seven closed but 14 opened in the city’s enterprise zone.

She said much of the retail development in the area has taken place just outside the city’s borders, such as at the Wal-Mart and Lowes on U.S. 460.

AMHERST COUNTY

Sales grew by nearly 2 percent from January through June, compared to the same time period last year.

That growth rate was not enough to meet the county’s expected sales tax revenue.

County Administrator Rodney Taylor said sales tax revenue in the first half of 2008 was $32,000 below projections.

Much of that loss, however, was made up for by meals tax, which produced $21,000 more revenue than expected, 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.”

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

APPOMATTOX COUNTY

Appomattox County suffered a drop in sales of 4 percent— or 1.6 million dollars — in the first half of 2008.

County Administrator Aileen Ferguson said that the county planned its budget this year with the expectation that sales tax revenue would go down.

Considering a lulled housing market and the rising price of gas, “you try to look at all those factors and make a reasonable decision on your estimate,” Ferguson said.

Still, sales tax income is coming in several thousand dollars lower than expected, she said.

The county is cutting purchases back to absolute necessities, she said.

tax facts

- Localities in Virginia receive a cut of the sales, use and food tax paid by consumers, amounting to 1 percent of the total sale. Counting the state’s portion, the sales tax in Virginia on most items is 5 percent. So is the use tax, which is paid on items bought online or out of state by a Virginia resident. The food tax is 2.5 percent.