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Report: Revenue from sales, room taxes to take huge hit in La Crosse area counties

Report: Revenue from sales, room taxes to take huge hit in La Crosse area counties

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Downtown La Crosse

A message on the marquee at the Rivoli Theatre serves as a reminder of the toll COVID-19 has taken on the local economy. Revenue from sales, room taxes to take huge hit in La Crosse area counties, and the pandemic puts La Crosse area arts venues in limbo.

Wisconsin counties will experience some of the economic pain experienced by its businesses caused by the COVID-19 pandemic, according to a new analysis.

Dramatic business shutdowns forced by the COVID-19 pandemic could decrease Wisconsin county sales revenue anywhere from $36.9 million to $55.6 million, or 8% to 12%, according to Forward Analytics, a Wisconsin-based research organization that does research for the Wisconsin Counties Association.

The analysis released March 30 estimates sales tax losses based on a short-term business interruption lasting about three months and a longer-term scenario, where safer-at-home orders are extended through May.

Sixty-seven counties in Wisconsin impose a 0.5% sales tax. Estimates prepared by Forward Analytics had previously projected statewide county sales revenue of $462.3 million for 2020. That total would decrease to about $425 million or $407 million under the two scenarios.

Sales tax revenue from restaurants, bars, hotels and motels and other tourism-related industries have dropped dramatically, with vehicle and retail sales also declining, the analysis said. Projections are based on how soon the economic sectors can recover after safer-at-home restrictions are lifted.

“The economic impact through the rest of the year depends on the ability to restart the economy after the abrupt shutdown,” the analysis said. “It will depend partly on the number of businesses that do not make it through this difficult time.”

The largest projected declines among counties under the less severe scenario would occur in Sauk (11.8%), Door (11.6%) and Vilas (10%), reflecting the dominance of the tourism industry in those areas.

The analysis did not look at room tax collections, which will also fall dramatically. Many municipalities use room tax collections to help pay for tourism promotion and other expenses.

In the 7 Rivers Region, La Crosse County would sustain projected sales tax losses of between 8.3% to 12.3%, or $1.13 million to $1.67 million, under the two scenarios. The county was expected to collect $13.6 million for the year.

The economic crisis also will affect Wisconsin sales tax collections. The state charges 5% sales tax. In 2019, the state collected about $5.7 billion in sales and use tax, representing about 33% of its revenues.

Wisconsin Policy Forum Research Director Jason Stein told that Wisconsin could take up to a 14% total revenue hit in a “moderate-to-severe” recession scenario.

The analysis under the short-term scenario projected economic interruption lasting about three months, with economic activity gradually approaching normal during the ensuing six months.

Hotel and motel sales would be 95% below normal in April, 60% below normal in May and 40% normal in June. Bars and restaurants sales would be reduced 70% in April and May, and off 30% in June. Retail sales would decline 20% in April and May and 10% in June.

Under the severe scenario, sales in hotels and motels would be 95% below normal in both April and May and 70% off in June. Sales in restaurants and bars would fall 70% in both April and May and 40% in June. Retail sales would decline by 40% in April and May and 30% in June.

There remains many uncertainties that can change the projections, the analysis said.

“Even the best economic forecasters are uncertain of the magnitude of the impact this crisis will have on the economy and whether that impact will be short-lived or extend over a relatively long period.”

Projected sales tax losses by county in 7 Rivers Region

County 2020 estimate Mild loss forecast Severe loss forecast
La Crosse $13.6 million $1.1 million $1.7 million
Monroe $4 million $324,730 $490,903
Trempealeau $2.2 million $165,920 $253,064
Juneau $2 million $176,537 $266,844
Vernon $1.9 million $145,468 $224,034
Jackson $1.7 million $135,574 $206,216
Crawford $1.6 million $132,837 $203,216
Buffalo $830,000 $63,406 $96,776

Chris Hardie is a longtime journalist with the La Crosse Tribune who is CEO of the 7 Rivers Alliance.

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