(MOBILE, Ala.) Mobile's Director of Finance is concerned. Barbara Malkove says online shopping is taking away crucial sales tax revenue from the Port City.
But some business owners believe the penny sales tax increase is to blame.
That sales tax was approved in October to help fight an expected $29-million budget shortfall.
At Tuesday's city council meeting, Malkove reported that the general fund for the last three months of 2012 was down nearly $5.8 million from 2011.
"It certainly raised the eyebrows of people in that meeting," said city councilman John Williams.
The city says 75% of the new penny's revenue goes into the capital fund. Only 25% into the general fund.
Still, John Williams plans to take action.
"What I am going to do is call for an immediate meeting of the finance committee. And it's important that we break it down and understand where the revenues were less than we expected," said Williams.
Sales tax revenue alone is down too.
In November 2012, the city collected half a million dollars less in taxes from businesses than it did in November 2011.
Although that's not including the one percent increase.
Bronstein's Furniture General Manager Richard Green believes the penny sales tax itself is to blame.
"I think tax shouldn't be an issue when you're making a major purchase and it's become an issue when you start charging 10 percent. And there are younger people that will go somewhere else to shop. We're a very mobile society. They can drive to Pensacola. They can drive to New Orleans to buy furniture and have a nice meal," said Green.
City officials blame the internet on the revenue downfall.
Black Friday internet sales reached a record $1 billion last year.
"The effect of the lower internet prices is also forcing stores to reduce their prices," said Malkove. Which means less tax revenue.
"I think we're losing a lot of our revenue to internet sales. It needs to be addressed at the federal and state level," said Councilman William Carroll.
Finance officials expect to have a good month when the January statement is presented because, while revenue is down, the city is also spending less. Officials say expenditures continue to be under budget.
