County sales revenue drops 10 percent

By Scott Nicholson

Local sales tax revenues have been slipping slightly, creating challenges as officials prepare to plan their budgets for the coming year.

Monthly revenue reports show that Boone is holding steady with last year’s figures while countywide sales have slipped about 10 percent. In November 2007, Watauga County reported $69.1 million in taxable sales, while Boone reported $39.4 million. In November 2008, the latest statistics posted by the N.C. Department of Revenue, Watauga County reported $62.4 million in taxable sales and Boone again reported $39.4 million in taxable sales.

“I think it may go down,” Boone Mayor Loretta Clawson said of sales-tax revenue, expecting a tough six months ahead. “I think we’ve been held up by football and by skiing, but from what I’m hearing from a lot of people, things are going to slow down.”

Clawson said town officials are planning to discuss economic issues during upcoming planning retreats to address the local economy. Local governments receive a portion of local sales taxes back from the state to help with budgeting.

Boone Area Chamber of Commerce president Dan Meyer said the business climate was mixed but the local economy had proven resilient and even provided some room for expansion.

“Some businesses are doing very well and we’re pleased with that, including some restaurants and hotels, and others are challenged,” Meyer said. “We’re seeing some construction in the area and some businesses are expanding. Anytime there are struggles, there are opportunities.”

Meyer said even though Appalachian State University and the N.C. Department of Transportation are facing funding cuts and slowdowns, some projects still need local support, particularly the widening of East King Street. The improvements were intended to proceed in conjunction with the construction of a new high school, but a freeze on right-of-way purchases could create a gridlock when the high school opens in 2010.

“We won’t have much of a choice,” Meyer said.

“If the high school is not open and the road is not done, we will have to contend with construction and the extra traffic, and there’s no other way around it. We will have to deal with it.”

Meyer said since many business sectors are interrelated, they have a stake in each other’s success. Much growth and expansion depends on construction, and with home sales and new construction down, other sectors of the economy are affected.

“There are pockets of stress and pockets of success,” Meyer said. “Each industry is affected in different ways. Real estate is probably the hardest-hit segment. Start-ups are down but that probably helps with existing inventory. It will probably pick up in the spring.”

The cold weather has helped the economy because ski resorts are reporting good numbers, and occupancy-tax revenues are holding steady, suggesting the High Country is still a sought-after tourist destination.

Meyer said the Boone Area Chamber of Commerce membership was holding steady, with new people joining all the time. He said a united front was important in addressing broad economic challenges.

“This is a good time to have a common voice speaking on behalf of business, and we’re getting new members,” Meyer said, adding the chamber is lobbying legislators and is planning a tax workshop and other endeavors to help keep local businesses modernized and successful.