Even a global pandemic couldn’t completely stop consumer spending.
Despite a postponed Masters Tournament and the uncertainties manifested during the rising spread of COVID-19, this year Columbia County posted its highest April sales tax numbers in its history.
The reasons point to a new state law’s impact that was magnified by more Georgians sheltering in place with money to spend.
Past projections have estimated that the Masters delivers an economic impact of at least $100 million to the Augusta area annually. Columbia County reaps the benefits when golf patrons from around the world visit and purchase food, lodging and services.
“Typically we have a lot of guests in town, and we didn’t have guests in town eating in our restaurants, shopping in our stores,” Columbia County Administrator Scott Johnson said. “Still, it was a record April for us.”
That month, the county took in $2,081,574.41, according to its Internal Services Department. In April 2019, with the Masters in full economic swing, the county collected $1,982,753.97.
Why the increase? Several factors created that phenomenon, Johnson said.
Columbia County was one of the last counties in the state to ask businesses to close to minimize COVID-19 spread, he said, “so we had a lot of people shopping in the county from surrounding counties that may have been shut down.”
Dave Wills agrees. He’s the executive director of the Association County Commissioners of Georgia, a nonprofit organization that provides services, support and legislative advocacy for the state’s 159 counties.
Wills said the “impact from COVID-19 has almost certainly been very disparate across the state,” depending on communities’ unique circumstances.
Many Columbia County workers who typically commute into Augusta likely have worked from home instead, which kept their spending power — and sales taxes — at home, too.
“So they were not in Richmond and going to the local diner to spend eight or 10 bucks for lunch,” Will said. “They were dining instead in either Columbia County or they were buying groceries. They were still spending money, but the location changed.”
Another factor that likely kept Columbia County residents at home was the absence of a traditional Masters Week, a time when many families leave for vacations. Dollars that would have been spent out of town instead stayed at home.
And some of the money people spent came from a source few could have predicted at the beginning of the year.
When business closings caused by the pandemic put many Americans out of work, more than the usual number of individuals and families received federal and state unemployment benefits, typically amounting to several hundred dollars per household.
“For a lot of jobs that were lost that were at the lower echelon of the pay spectrum — you’re thinking about the hotel and tourism industry — typically most people working in those arenas are not earning very high salaries,” Wills said. “So in some cases, perhaps, many people were actually better off unemployed as long as they had those benefits.”
Also, not everyone who stayed home stayed jobless. People still working remotely and drawing paychecks found themselves with extra income, which many then spent.
“When I talked to my friends in the car-dealer business, and the boats and the RVs, these folks were all having record sales months for the past several months,” Johnson said. “For whatever reason, you would think that with people losing their jobs and unemployment that disposable income would go down. I think the opposite has happened. I think there’s been a lot of money imbued into our economy, and people are spending that money.”
Georgia Department of Revenue numbers appear to bear that out.
The state prepares an annual Sales Tax Commodity Report that itemizes by county which sales tax dollars are derived from certain purchases. For example, for this past April, Columbia County took in less sales tax in the accommodations sector than it did in April 2019. Accommodations would include hotel rooms where Masters guests would have stayed.
But the county took in more April sales tax this year in three other areas — the food/bar sector, which includes grocery stores, liquor stores and restaurants; home furnishings, including big-ticket items such as furniture and appliances; and general merchandise, namely clothes, jewelry and other consumer items.
“I would ordinarily be buying lunch every day in downtown Atlanta. But instead, for six months I’ve been working from my home in rural Georgia,” Wills said. “So I’ve ordered tennis shoes, I’ve ordered parts, I’ve ordered all kinds of things.”
But perhaps the most impactful factor in Columbia County’s higher sales tax revenue came from a bill Gov. Brian Kemp signed into law Jan. 30 but went into effect April 1.
House Bill 276 became a “marketplace facilitator” law that now requires online businesses to collect and remit sales taxes to the Georgia Department of Revenue on behalf of third-party sellers. With the formidable number of sellers handled by online retail giants such as Amazon, the dollars have been adding up.
Johnson said that some people might argue that “there’s only X amount of disposable income. If they’re shopping online, they’re not shopping in the stores. But we’ve actually not seen that. We’ve actually seen the increase.”
Wills’ team members at the Association County Commissioners of Georgia tried to predict how much more money the state would take in under the new law.
“I want to say they said $130 to $150 million more per year,” he said. “And in just the first three months that it’s been in place, it has collected that much. It’s a very significant difference that’s being made because of marketplace facilitator.”
Georgia Gov. Brian Kemp issued a statewide shelter-in-place order through April that closed bars, in-person restaurant dining and businesses deemed nonessential. Sales tax collection patterns varied county to county.
In Floyd County, for example, April collections for food/bar and general merchandise purchases were lower than they were in April 2019, suggesting that fewer people patronized businesses, but higher for home furnishings, at a time when more people nationwide were preparing home office spaces.
Effingham County, near Savannah, trended similarly to Columbia County. Effingham’s April sales tax revenue, like Columbia County’s, rose over April 2019 in the food/bar, general merchandise and home furnishings categories.
How long the sales-tax bounce might last for some counties is hard to gauge, Wills said.
“If there’s a shoe to drop, and I think there may be, it is that the federally enhanced unemployment benefit has been cut in half and is going to expire unless Congress comes back and does something, and the stimulus is gone,” he said. “So if there is going to be a decrease in sales tax for any number of counties, I think it’s yet to show up, but it’s likely to in the next couple of reports that we see. I think it’s critically important to remember that.”