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Hampton budgets conservatively for possible loss of grocery sales tax, reducing FY23 sales revenue by $3.3M
Summary
City staff said they assumed the FY23 state budget could eliminate local grocery sales tax, which reduced the city's sales/use tax projection by $3.3 million; if the state reimburses, the city could lower its advertised real estate rate.
City finance staff told council they reduced the city's sales and use tax projection by $3.3 million to reflect a scenario in which the General Assembly eliminates the grocery sales tax. "We have assumed for purposes of this projection that the grocery sales tax will be eliminated by the general assembly for fiscal year 23. Therefore, we reduced our revenues for sales and use tax by $3,300,000," Finance Director Carl Daughtry said.
City Manager Bunting explained that if the state ultimately reimburses localities for the lost revenue, the city would have roughly $3.3 million to restore in the budget and that such a change could allow a lower real estate tax rate than the tentatively advertised $1.19. Staff emphasized they must advertise a conservative (highest) rate to comply with state law while retaining flexibility.
