Inflation fueling increased sales tax collections in Harvey County

Chad Frey
The Kansan
County officials believe inflation is the primary driver of an increase in sales tax collections.

It has been several months since Dan Bronson, assistant county administrator for Harvey County, declared he was struggling to figure out sales tax collections — following business shutdowns and slow downs conventional wisdom would suggest sales tax collections would dip.

But that dip never really occurred. Collections have kept pace, or grown, when compared month-to-month over previous years.

And again this month collections have grown. This time Bronson knows why — and it is a classic "good news/bad news" scenario.

The good news is the county, and cities, are collecting more revenue. The bad news is the why.

"I would say it is a good thing, but the not so good thing is you can guarantee that inflation is playing a role in this," Bronson said. "Anybody who has been to the grocery store knows that prices have gone up. With that, you also collect more in sales tax. It is a double edged sword."

The September collections for the county increased to $77,077.92 — a nearly 14 percent increase of September of 2020. The second cent of sales tax collections, mostly distributed to cities, was up 6.8 percent over 2020 — and 2020 was more than 13 percent higher than 2021.

According to the USDA, food-at-home prices have increased 2.1 percent and food-away-from-home prices have increased 3.3 percent. The Consumer Price Index for all food has increased an average of 2.7 percent. Of all the CPI food-at-home categories tracked by the U.S. Department of Agriculture Economic Research Service, pork has had the largest relative price increase at 5.4 percent while fresh vegetables increased at the the smallest rate at 0.5 percent. The USDA says no food categories have decreased in price in 2021 compared to 2020.

Those increases are not done yet. The USDA expects  food-at-home prices to increase between 2.5 and 3.5 percent, and food-away-from-home prices are expected to increase between 3.5 and 4.5 percent. In 2022, food-at-home prices are expected to increase between 1.5 and 2.5 percent, and food-away-from-home prices are expected to increase between 3.0 and 4.0 percent.

According to the Bureau of Labor Statistics, in August the Consumer Price Index for All Urban Consumers rose 0.3 percent on a seasonally adjusted basis while rising 5.3 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.1 percent in August; up 4.0 percent over the year. The next release of CPI statistics is scheduled for Oct. 13.