Retail rollercoaster: How DeKalb County municipal sales tax revenue was impacted by pandemic in 2020

What local retailers are doing about it, and why they say shopping local is even more important now

From March through present, local economies throughout DeKalb County have felt the burden of economic strife brought on by the COVID-19 pandemic.

Retail data shows municipalities throughout DeKalb County began feeling the economic effects of the pandemic in April, and while sales revenue picked up slightly in the summer, it dipped again in October, which is the most recent available retail sales revenue data.

The gloomy outlook isn’t enough to stop small businesses from celebrating the holidays, however. And although 2020 has been a difficult year for most — if not all — small business owners, Vickie Obermiller said the holiday shopping season has helped make 2020 a little brighter.

“This holiday season, business has been fairly well,” she said. “It’s somewhat better than in previous years. I think it’s because people are focused on staying local and shopping local.”

Obermiller is the owner of Kid Stuff in DeKalb, a shop that sells maternity and children’s resale items, including clothing, toys, books and baby equipment.

Matt Duffy, executive director of the DeKalb Chamber of Commerce, has noticed people “have been shopping local during the pandemic.”

“From what I’ve seen and heard, more people are looking to shop local first,” he said. “They are going into small businesses to buy unique items and gift cards. They’re buying for the mail carrier, newspaper deliverer and teachers. Whether it’s a stocking stuffer or a catered meal, any size gift, a gift card of any amount makes a big difference to small business owners.”

He said he also noticed stores have made considerations for the customers during the pandemic, including adding curbside pickup and online shopping.

What the numbers say

In March, the City of DeKalb collected $842,010 in sales tax, according to documents obtained by the Daily Chronicle through the Freedom of Information Act and public records through the Illinois Department of Revenue, which reports monthly allocations of sales taxes collected by municipalities across the state from retail, automobile, food and drug and medical appliance sales, and merchandise sales not including real estate, bonds or stocks.

That March 2020 DeKalb total is compared to $843,886 from March of 2019. The effects of the COVID-19 pandemic began to show in April. DeKalb collected $842,096 in April of 2020 compared to $1,002,033 in April of 2019, a $159,937 difference or 16% decrease in revenue.

In May, that dipped further to a 30% decrease in sales tax revenue, then recovered slightly throughout the summer to just a 21% monthly decrease comparing June 2019 to June 2020 tax revenue numbers, then 7% decrease from July 2020 and July 2020, an 8% decrease from August year over year.

IDOR reports monthly data with a one-month lag. So November and December revenue from sales tax will not be available until the end of December and January, respectively. Revenue collected from sales taxes is disbursed to local governments from sales made the month prior. So tax revenue collected in March, for instance, represents sales made in February.

In Genoa, records show sales tax revenue started to dip in April as well, with $45,210 collected compared to $51,511 in April 2019. For May of 2020, Genoa collected $57,513 compared to $61,573 in 2019.

In Sycamore, April 2020′s sales tax collection was $518,402 compared to $539,327 in 2019.

The National Retail Federation forecasts that holiday sales during November and December will increase between 3.6% and 5.2% from 2019 to a total between $755.3 billion and $766.7 billion.

According to the NRF, retailers are planning for a greater portion of their sales to come from e-commerce this year. The NRF expects that over the holiday season, online and other non-store sales will increase between 20% and 30% to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.

Paul Borek, executive director of the DeKalb County Economic Development Corp., said that shopping local has never been more important than now, especially with online shopping becoming more popular.

“This year, more than ever, local businesses impacted by COVID-19 operating restrictions need our support,” Borek said. “What better time than the holidays to direct purchases to local businesses working hard to manage reduced operations and revenues?”

From June through September in Genoa, an average of $55,986 was collected in monthly retail sales tax revenue, according to IDOR data. That’s compared to an average of $58,189 for those four months in 2019. In October, Genoa collected $54,703, the lowest revenue since June of this year, compared to an October 2019 total of $59,839.

That trend echoes sales tax collection in Sycamore and DeKalb, with a slight rise throughout the summer and then another dip in October, the same month mitigations went into effect to curb the fall resurgence of COVID-19 cases across the state. Regional mitigations were imposed on DeKalb County beginning Oct. 3, with the prohibition on indoor dining, and then tightened more in November when the whole state moved back to Tier 2 mitigations according to the Restore Illinois plan, which put caps on gatherings and closed gyms, recreational facilities, theaters and gaming facilities.

For the City of DeKalb in September and October, the trend began another downward turn, with sales tax revenue coming in at an 11% decrease in September of 2020 compared to September of 2019 in DeKalb, and 13% decrease from October 2020 compared to October 2019, according to retail sales data.

Since the data isn’t yet available, it’s unclear how the holiday shopping season will impact municipal sales tax revenue collection, though local retailers continue to push the importance of shopping local.

In November, the proposed City of DeKalb 2021 fiscal year budget, while balanced, showed a revenue loss of about $4.5 million, according to city documents, due to losses in Bar and Restaurant sales tax, and hotel motel taxes, to name a few, said DeKalb City Manager Bill Nicklas in November as he presented the budget to the City Council.

“We don’t know how we’re going to end the year,” Nicklas said at the time. “But I daresay, and I hope I’m wrong, but if we don’t see any opening of hospitality businesses throughout their main season in the next six weeks, and it doesn’t look like now we’re in a hurry to get there, we may see another 3, 4, $500,000 loss in revenue. That’s the reality we’re facing.”

Shortfalls in budgets in DeKalb, for instance, are being mitigated by a continued hiring freeze, and cushions from the government. The City of DeKalb received in mid-November $1.8 million in funding through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Nicklas said. That, coupled with another $1.8 million taken out of the city’s General Fund to pay down four bonds brought the needed savings to balance the budget, Nicklas said.

Rising to the challenges

After closing for a few months in the spring when the pandemic began, Obermiller describes re-opening her shop as “switching gears” to compete with online shopping and to follow statewide mitigations.

“I had to re-vamp my online website, began offering pick-up and started video shopping where customers could shop using video, pictures and messaging,” she said. “I think after having a few snafus with delivery services, people want to shop local and have their items right away.”

Lizzy Oparyk, owner of Lizzy’s Pink Boutique in Sycamore, has also made changes to offer a safer shopping experience during the pandemic.

“I think people want to shop local because it’s safer to shop in a small business than a crowded big box store,” she said. “We’re doing everything we can to make our customers feel as safe as possible. We’ve had to re-invent ourselves. We now offer local deliveries, curbside pickup and an online store.”

Even with the added ease and amenities, Oparyk said the number of customers to her boutique has been down.

“It’s definitely been slower,” she said. “There have been a couple of events in downtown Sycamore like Moonlight Magic.

The items shoppers have been purchasing have also changed. Usually they would be buying Christmas dresses and jewelry for get-togethers, but this year, Oparyk said her top sellers are comfortable lounge wear.

“I can’t keep sweaters in stock because they’re very high in demand, and I’ve sold a lot of denim leggings,” she said. “I’ve also been selling a lot of funeral wear, clothing to wear inside the casket.”

Popular items sold at Cracker Jax in DeKalb include small gifts, include jewelry, candles, gloves and scarves.

“It’s been a difficult year and quite a rough summer, but the holidays have been a bit busier,” store manager Danielle Kinser said. “People are sick of being stuck at home, and it’s fun to get out again and do some retail therapy. We’ve also stepped up our customer service and require masks and social distancing to offer a safe shopping experience for all.”

Linda Zenn of DeKalb visited Rustic Roots in Sycamore to pick up an online order and do some holiday shopping after she noticed holiday items were on sale, marked 30% off.

“I’m shopping for gifts and for myself,” Zenn said. “Shopping locally is an entirely different experience. It brings you back to going window shopping with your parents, exchanging gifts with your loved ones and celebrating the holidays.”

Anna Wojciechowski, a recent Northern Illinois University graduate, admits to doing more online shopping during the pandemic, but has tried to do more in-person shopping before Christmas.

“Shopping online is easy, but I try to buy local whenever I can,” she said. “I love Christmas shopping because of all the lights and decorations. You get a warm Christmas-y feeling when it’s cold outside and warm in the store and you’re buying gifts. I love the holidays because of the shopping season, this year is no exception.”

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