From economic watchdog George Zeller:

The Economic Indicators analysis of the trend in the inflation-adjusted Cuyahoga County sales tax collection level has been updated today with newly available data for October 2009. The report on this newly updated tax revenue figure is on here (PDF).

The level of sales tax collected in Cuyahoga County in the new figure continues to be sharply and alarmingly negative with a -10.13% decline in the real inflation-adjusted twelve month moving average of the sales taxes collected in Cuyahoga County. This was the most rapid rate of decline in the level of the Cuyahoga County sales tax collection of any month during the last 20 years. Rates of decline during the months of the 1990s recession were not nearly as severe as the decline seen in September 2009. The worst previous month for decline in the Cuyahoga County sales tax was last month in September 2009, when the decline was -10.05%.

Of the ten worst months of decline in the Cuyahoga County sales tax level during the last 20 years, seven of the ten worst months were in March, April, May, June, July, August, September, and October 2009. The accumulation of historically large declines in local sales tax revenues have accelerated the depth of the rapid decline over several months this year. Seven of the ten fastest monthly declines in the Cuyahoga County sales tax during the last 20 years have been during 2009 months alone.

A new record for most rapid decline in the Cuyahoga County sales tax during the last twenty years has now been set for four consecutive months, including July, August, September, and now the new October figure in 2009.

Making matters worse, the Consumer Price Index measured a small but measurable deflation level of during almost all of the months covered in the 2009 sales tax figures. Therefore, the deepening decline in the inflation-adjusted Cuyahoga County sales tax collection level had been due entirely to falling levels of retail sales in Cuyahoga County and had not been caused by inflation. The Consumer Price Index for all urban consumers measured a -2.1% decline in inflation during July 2009, the reference month in the new figures.

The peak level of sales taxes collected in Cuyahoga County since 1990 came in February 2001. In comparison to the February 2001 level of inflation-adjusted sales taxes collected in Cuyahoga County, the September 2009 figure is down by an astonishing and obviously highly alarming -22.1% in only eight years. In Cuyahoga County, on an annual basis, this represents a decline of $43.95 million per year, a stunning and catastrophic loss in sales tax revenues and corresponding local retail sales.

It is very clear that the deep recession currently impacting Ohio and the USA has not ended its impact on Cuyahoga County. To the contrary, today's new sales tax data confirm that the local recession continues to deepen with a stunningly negative impact on local retail sales that are measured by the sales tax collection level.

This unfortunate sharply negative measure of the condition of the local business cycle is not limited only to Cuyahoga County. The Ohio Office of Budget and Management and Budget reports that the statewide Ohio sales tax is barely reaching even the downwardly revised estimates that had previously been released by Ohio OMB. The Ohio statewide sales tax collection level is down by 6.2% in comparison with last years's figures for September early in the fiscal year. OMB found that the Cash for Clunkers program increased the auto sales tax figure during August by 8.8%, but the non-auto sales tax continues to perform very poorly with a 8.7% decline in August, thus canceling out the impact of improved auto sales tax figures. Overall, adding the automobile and non-automobile components together, the Ohio statewide collection of sales tax was down by 6.2% in September 2009 when compared with September 2008. The most recent Ohio tax revenue report from OMB is available here.

George Zeller is an available Economic Research Analyst.

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