Gallatin secures eighth month record high tax collection, cushioning the city's 'rainy-day fund'

Revenues from sales taxes are doing better than expected, The City of Gallatin’s Department of Finance reports.

For the eighth month in a row, Gallatin has secured record high “million-dollar month” tax collections, further cushioning the city's rainy-day fund.

A monetary reserve used in poor financial times or economic crisis, Gallatin’s “rainy-day fund” has received an increase of about 5% being added to the fund this year by the city council.

Previously, the amount set aside equaled 20% of the city’s general fund operating costs, or $7,724,031 for 2022, according to an earlier press release.

But that amount – the equivalent to three months of operating costs – has been increased to 25% of general fund operating costs, or $9,655,039 for 2022.

“The rainy-day fund amount is set based on operating costs. As operating costs increase, the amount of the fund increases too, so yes, these revenues could be used to fund the increased requirement,” Director of Finance Rachel Nichols said concerning whether the increase in tax collections will be reflected in the city’s rainy-day fund.

Though Nichols stressed that the increased revenues won’t inevitably generate more spending by the city.

“While revenues are increasing, so are expenses. Most things cost more today than they did a year or two ago,” Nichols said. “I like to be conservative and proceed with caution. Any and all spending is under the authority of the city council.”

So, what revenue does the city collect?

City revenues are generated from sales taxes collected by all retail establishments positioned inside city limits such as restaurants, grocery stores and car dealerships, according to an earlier press release.

A total of 9.25% sales tax is collected in Gallatin, including a 2.25% city tax and 7% state tax, of which Gallatin and other cities in the state receive a portion as “shared revenue” to cover the expenses of running local government.

Historically, Gallatin would expect a tax growth rate between 6-7%; however, the last two years have averaged about 20 percent, according to city officials.

Between March and October 2021, the city collected more than $8,500,000 from sales taxes, an increase of nearly $2,000,000 for the same eight months in 2020.

December 2020 marked the city’s highest monthly collection on record at $1,198,000 and the last “million-dollar month” prior to the current eighth month stretch.

Katie Nixon can be reached at [email protected] or (615) 517-1285.

This article originally appeared on Nashville Tennessean: Gallatin secures eighth month record high tax collection, cushioning the city's 'rainy-day fund'