By Kennon Walthall, Avenu Senior Vice President
In almost no time at all, COVID-19 has transformed both society and the economy. A rapid shift to remote work and the emergence of more digital-first services, combined with new social distancing and safety protocols, have altered everything from our work patterns and office practices to our home lives and shopping schedules.
While many of these changes hold promise for the future, they come at a cost. This is especially true for state and local governments whose tax revenue has dramatically been impacted the pandemic, and many are facing a severe budget crunch. From March to August of last year, as the coronavirus pandemic first took hold, total tax revenue at the state level declined by 6.4%, and state governments were suddenly facing hundreds of billions in lost revenue across the board.
Better revenue management will have to be a top 2021 priority for state and local governments looking to thrive in the post-COVID era. That’s because COVID-19 hasn’t just hurt the budgeting bottom line by depressing tax revenues; COVID is changing how tax revenue comes in and where can it be found, with previously reliable tax revenue streams drying up, while others grow. To stay on top of their revenue streams, governments will need to adopt the data-transparent, cost-efficient and effective technology tools and practices that maximize tax compliance in the new COVID-19 tax landscape and ensure that no tax revenue source goes untapped.
Tax revenue has always been a huge part of our economy, with state and local tax revenue accounting for about 9% of our national GDP. But taxes come in all shapes and sizes, and not every tax contributes equally to total tax revenue across every municipality and all 50 states. That means a major disruptive event, like the coronavirus pandemic, can shift the way tax revenue comes in, creating a disparate economic impact and changing the way taxes ought to be collected.
Take sales tax, for example. In 2017, state and local governments took in about $389 billion in general sales tax revenue, amounting to about 12% of overall revenue. In 2020, COVID-19 reduced sale tax revenue by about $50 billion, mostly by reducing the emphasis on what and how much people bought from heavily-taxed goods and services like restaurants and hotels.
But that overall decline in revenue doesn’t tell the whole story, because the impact from COVID-19’s effect on sales tax revenue wasn’t felt equally across the country.
Only 46 states collect general sales tax, and of those 46 states, some rely on sales tax more heavily than others to balance their budgets. These differences in revenue management led to significantly different COVID-19 outcomes; new research has found that the more a state or local government relied on sales tax income, the higher its unemployment rate for government employees during the pandemic.
But at the same time that sales taxes have gone down, other tax revenues may start to go up. As more people leverage the freedom of remote work to relocate from urban to rural areas, property taxes in some municipalities will rise. And as more people order take-out and use online delivery services, these digital platforms like Uber and DoorDash present yet another lucrative tax revenue stream.
A similar story can be told about a plethora of different tax revenue streams. With stagnant business growth in 2020 and many offices retooling their employees for remote work, business licensing taxes and occupational taxes are likely to decrease. At the same, alcohol sales have increased dramatically and alcohol taxes have grown with them.
What we see across revenue streams, industries, municipalities, and states is a shifting tax landscape, where previously reliable revenue streams are drying up while others are widening and increasing. The key for governments will be their ability to comprehend this changing tax landscape and tap into it effectively by maximizing compliance.
There’s a lot that governments can do, but maximizing compliance will start with an internal audit. As tax revenue streams shift and change, governments need assurance they’re getting what is owed to them. But all too often, cumbersome paper processing, opaque data, and an over-reliance on manual work can hamstring a government’s capacity to get a clear overview of patterns of compliance or noncompliance, especially when tax realities are rapidly changing. A comprehensive, internal audit can ensure that doesn’t happen.
In the same vein, governments must prioritize adopting technology that streamlines tax collection and administration. An automated tax management system, for example, can make sure governments get their tax revenue quickly, easily, and with a minimum of human error. Many of these systems are cloud based and can be quickly and easily implemented for a jurisdiction. Meanwhile, citizens are expecting and often times demanding an easier and more convenient way to meet their obligations So, if governments don’t have the digital portals and online payment options that facilitate paying taxes, licensing fees, and fines, then a lot of revenue will potentially get lost in the confusion and upheaval.
These are just a few examples, but the list goes on. The main idea is that better administrative practices and new technology can help governments enhance tax compliance by making tax collection and payment easier and more efficient for both governments and citizens, while also rooting out noncompliance. By doing so, state and local governments can unlock their 2021 revenue streams and face the future of our changing economy and society with strength and success.
Local governments increasingly seek private-sector solutions when it comes to administering revenue programs, as the Avenu client roster shows.
Elmore County in Alabama has agreed to use Avenu for processing revenue for sales and use taxes, while in Georgia, Floyd County has engaged Avenu to audit its hotels and increase compliance with the requirements of the county ordinance. Avenu also will support Georgia’s City of South Fulton with compliance audits of its business license and alcohol taxes.
As pressure builds for jurisdictions to fund services without raising taxes, programs like these help by increasing the amount of taxes already owed and ensuring the fairness of the tax system.
Avenu’s Vice President of Tax and Auditing Services, Jonathan Gerth, is bringing his expertise to Opelika, AL on Aug. 15 for a one-day business workshop in partnership with the Opelika Chamber of Commerce. Titled “Everything You Want to Know About the Collection of Sales Tax in the City of Opelika,” the one hour seminar is designed to educate local chamber members and potential chamber members on topics such as municipal business licenses requirements, how municipalities apply rental taxes, and the Supreme Court’s ruling regarding sales & use tax. Interested parties are encouraged to register online. Registration is $10 for Chamber members and $15 for prospective members. Lunch will be provided.
Avenu’s friends in the South may have spotted the Avenu booth at the 50th annual Alabama Municipal Revenue Officers Association (AMROA) Summer Conference at The Westin, Birmingham this week. A dedicated partner to revenue administrators around the country, Avenu is thrilled to be a Silver Sponsor of the event and support the professionals who help ensure their municipalities are fiscally secure.
Avenu Business Development Executive Yolanda Watkins Bailey was on site throughout the event, answering questions, introducing Avenu’s tools and services, and listening to agencies needs and concerns when it comes to their financial matters.
“I love getting to meet Alabama’s municipal finance officers face to face and learning what helps them succeed. Avenu has such great resources available and I very much enjoy when we can show that to a local audience.”
If you missed Yolanda this week, feel free to reach out to her with any questions about Avenu or its services at ywatkins@avenuinsights.
Adam Rubin
South Carolina’s city managers will be on the lookout for Avenu Insights & Analytics at the Municipal Association of South Carolina Annual Meeting. Taking place July 18-22 at the Marriott Hotel, Hilton Head Island, the MASC is a place for local government leaders to network, learn, and share their own insights on how to best manage the state’s municipalities. An avid supporter of local agencies, Avenu remains committed to helping South Carolina’s cities maximize their revenue and run more efficiently, and will be on site throughout the week. Look for Avenu Business Development Executive Adam Rubin at sessions – he will be ready to answer your questions regarding:
For any questions or to get in touch with Adam at the conference, reach out to him at adam.rubin@avenuinsights.com.
Download our recent webinar by Avenu Senior Vice President Doug Jensen and Product Developer Eric Myers on how Avenu’s Clearview software can help you recognize and anticipate changes in your jurisdiction’s revenue. Doug highlights all that Clearview can do for your agency, and Eric goes over features such as graphic displays, overlays and real-time data. With this you can easily show your council, mayor and citizens why revenue changes occur and how they affect overall economic performance.
This free presentation will also provide you with an overview of how Clearview can:
View the webinar for free on YouTube, and if you want to try Clearview Avenu is offering a free 30-day trial. Email webinars@avenueinsights.com to sign up.
In keeping with its history of supporting agencies and municipalities in Texas, Avenu will be sponsoring the Texas City Management Association Conference from June 21-24 in Galveston.
Client Executive Brenda Anderson
As a silver sponsor of the event, Avenu continues to demonstrate the value it places on local governments and its mission to provide accessible revenue solutions for agencies of all sizes. With this year’s conference theme of “Surviving the Riptide,” Client Executive Brenda Anderson will be on site to provide revenue management insight to attendees and answer any questions about getting your municipality through challenging times.
“Riptides can be intimidating and scary, but if you stay calm they are manageable – just like any budget problems you might face in local government. I’m looking forward to connecting with the cities and counties of Texas to show them that with the right tools, they can survive – or even prevent – these budgetary “riptides” with ease,” Brenda says.
Brenda will be on site all weekend, ready to address your city or county’s compliance solution needs and is eager to help ensure your agency is financially sound. Contact her at brenda.anderson@avenuinsights.com if you’d like to meet at the conference.
Avenu (formerly known as Revenue Discovery Services/RDS in Alabama) continues its leadership role in the state as a sponsor the Alabama City County Management Association Summer Conference, June 6-8 in Orange Beach.
As silver sponsors of the ACCMA event, Avenu will be co-hosting the Summer Social on Thursday evening. In addition, team members will be on hand at the Avenu booth to discuss your city’s or county’s particular revenue enhancement or administration challenges.
Perry Brasfield, Avenu Client Executive
Yolanda Watkins, Business Development Executive
Avenu’s Yolanda Watkins Bailey, Perry Brasfield, Audrey Freemen and Randy Godeke will be present to answer any and all questions pertaining to:
“Avenu is committed to helping agencies in Alabama get the most out of their revenue. I look forward to meeting with local government leaders this week to work toward making a positive impact on our great state,” Watkins says.
Continuing its expansion, Avenu has launched an inside sales department and welcomes BC Alexander and Kaylee Yeatman as the first two professionals based in the Herndon, Virginia headquarters.
The team has already begun engaging local government executives about how Avenu’s revenue enhancement and administrative solutions can meet short- and long-term fiscal challenges.
An Iowa native, BC joins Avenu with a background in both engineering and business development. His master’s degree in computer engineering and experience in IT security development give him a unique perspective on Avenu’s technical offerings, while his recent work in business management and marketing will give him an edge in helping Avenu’s clients find the best solutions for their specific situations.
Kaylee comes to the team following an extensive background in customer relations. Her strengths include interpersonal communication skills, customer service, and familiarity with tax credit properties thanks to her time as a leasing specialist. Originally from Maryland, Kaylee is now a Virginia resident and is looking forward to helping all jurisdictions maximize their financial potential.
“I’m excited to work for a company that is reaching out to work with and help local communities. Avenu offers the chance for local governments to grow and prosper, and I’m eager to be a part of that,” Kaylee notes.
“Our national footprint is generating huge amounts of field information. The use of an inside sales team is going to both better assimilate that market intelligence and allow our Client Executives to share more critical information with customers. It’s an exciting time for this business,” says CEO Paul Colangelo.
Following the impressive expansion of its East Coast team, Avenu Insights & Analytics is looking to add Client Executives to its team in Southern California. The news follows the announcement that Tracy Vesely, former Director of Finance in Hayward, has been hired to head up the West Coast Client Services group.
For those looking to advance their career in the field of local government, it’s a golden opportunity to join a reputable and rapidly expanding firm. As the client-facing members of Avenu, Client Executives are an integral part of the business and have the chance to meet face to face with the power players of local governments and agencies. As a remote employee, the Client Executive will also have the ability to work from the comfort of their home when not meeting with clients, a benefit that illustrates Avenu’s forward-thinking approach and dedication to leveraging technology.
This dynamic role is responsible for analyzing and communicating core products and services to local government leaders – including tax analyses and audit findings – in order to help them maximize agency revenue. Additionally, Client Executives train clients on Avenu products and services, and actively seek out new opportunities to grow Avenu’s customer base. Attendance at regional and statewide conferences is common, and providing cross-agency insights and experiences are core to adding value for Avenu clients.
According to Avenu, the ideal candidate will possess a strong technical understanding of local taxes as well as experience in local government and/or public sector sales and marketing. They will also be skilled networkers, ready and willing to attend industry events and maintain Avenu’s presence in the field. This position requires proven communication skills and the ability to present technical information to clients in a digestible fashion.
Candidates interested in a position with Avenu can apply via its online application.