WASHINGTON – Sales tax collections grew at the fastest rate in some of the least likely places in Maryland over the last five years.
Dorchester, Talbot and Allegany counties led the state in per capita growth in sales taxes from 1994 to 1998, according to a Capital News Service analysis of figures provided by the Maryland Comptroller’s Office.
In rural Dorchester County — one of only three counties whose population dropped in the same period — sales tax collections jumped by a whopping 69 percent per capita during that period, far outstripping the rest of the state.
Other counties with rapid growth in sales taxes tended to be the faster- growing jurisdictions, like St. Mary’s and Calvert. One that bucked the trend was Baltimore City — like Dorchester, it lost population, but its sales tax revenues grew by 30 percent per capita.
The growth rate for sales taxes in some of the state’s other large counties, meanwhile, barely kept pace with the rate of inflation, which was 10 percent for the five years.
But business and economic development officials in the larger counties said they were neither surprised nor particularly concerned by the rankings, which they said simply reflect the volatility of the smaller jurisdictions’ economies.
“What you’re seeing in some of these counties is the type of growth that Baltimore County experienced a generation ago,” said Bob McKinney, president of the Baltimore County Chamber of Commerce.
Maryland’s 5 percent sales tax rate remained unchanged during the five- year period, when sales tax collections statewide grew by 19 percent, from $1.8 billion in 1994 to $2.2 billion in 1998.
The increase was driven by building and contracting activity, which was up 28 percent statewide; furniture and appliances sales, up 24 percent; and general merchandise, which rose 21 percent. Automobile sales taxes rose only 8 percent during the period, slower than the rate of inflation, while tax on clothing sales rose a paltry 1 percent over the five years.
In Dorchester, general merchandise led the increase in sales tax collections, up 88 percent during the period. Transportation and utilities were also healthy, up 51 percent for the five years.
County officials were surprised by the remarkable jump in sales activity. They attributed it to a strong rebound from a “flat” economic period for the county just a few years ago.
“Maybe we went from zero to zero-plus,” said Betty Causey, director of the Dorchester County Office for Economic Development.
Causey noted that Kmart opened a store in the county in 1994 and a Wal- Mart opened in 1995. County officials also point to three new manufacturing companies that have opened since 1995, bringing good-paying jobs with them.
Talbot County attributed its 40 percent tax revenue jump to a similar influx of discount department stores and to increased efforts to aggressively market the county’s tourist attractions, like the St. Michael’s Maritime Museum.
Angela Lane, a fiscal analyst for Talbot, said the county’s hotel tax revenues tripled over that period, which translates into more people eating in the county’s restaurants and browsing in its shops.
Allegany County officials, meanwhile, could not pinpoint the engine driving the county’s 37 percent growth in sales. “I honestly don’t know,” said John Kirby, of the Allegany County Economic Development Department.
Booming counties like St. Mary’s and Calvert, however, knew exactly where the increases were coming from and they said were not surprised by their soaring sales tax collections.
Calvert County’s population grew by 16 percent during the five-year period, and commercial development has kept pace. St. Mary’s County’s population grew by 10 percent, driven largely by the addition of 5,500 jobs at the Patuxent River Naval Air Station.
Sue Wilkinson, St. Mary’s County’s deputy director of economic and community development, said many of those jobs are high-skilled and high-paying, and that translates into an increase in sales.
Baltimore County’s McKinney said it is not surprising that the growth rate is faster in the newer counties — “virgin territories” as he called them.
That was echoed by Peter Bang, financial programs officer with Montgomery County, who said his county’s “developed areas have reached a saturation point in terms of retail.”
Officials with the larger counties also said that the sheer size of their sales tax revenues make sharp increases and decreases unlikely. They point to other areas as better indicators of their economic health — such as high-tech and financial industry jobs in Montgomery and Anne Arundel counties.
Montgomery and Prince George’s officials said that the increase in sales tax collections for their jurisdictions is also tempered by cross-border traffic — residents going to Virginia or Washington, D.C., to shop, for example.
“Prince George’s residents are probably helping other counties sales tax figures,” said Bob Zinsmeister, assistant vice president with the county’s chamber of commerce. He said that when the county tries to attract new retailers, those businesses often reply that they already have Prince George’s residents as customers in their other locations.