Shawnee tax from food store businesses off by 9 percent

Sunday, May 5th 2002, 12:00 am
By: News On 6

SHAWNEE, Okla. (AP) _ Sales tax collections in the city of Shawnee for all food store businesses have decreased 9.09 percent in less than one year since the FireLake Discount Foods opened, says city treasurer Jim Wilsie.

FireLake Discount Foods is owned and operated by the Citizen Potawatomi Nation. The tribe is not required to issue its sales tax collections to the tax commission.

The grocery business opened May 1, 2001 and 10 months of sales tax figures from the city of Shawnee show a decrease of $119,632 in the food stores businesses category from last year's figures, Wilsie said.

Wilsie said Shawnee's overall sales tax picture shows sales tax collections for all other businesses increased by 4.62 percent, but combined with tax figures from the city's grocery sales the percentage for overall sales tax figures drops to a 2.79 percent increase, due in part to the decline in sales tax on all food stores.

He said last year the city had a 6.3 percent increase in all sales tax collections for the same period, although a change in reporting methods contributed to the jump in figures.

Had reporting methods remained consistent, Wilsie said sales tax revenue would have likely averaged a 5 percent increase, as it has in years past.

``Overall, we're up _ just not as much as we were in previous years,'' Wilsie said.

He said the city's budget for fiscal year 2002-2003 will be prepared with an estimated 9-percent anticipated decrease.

Tecumseh City Manager Gary Rader said he believed Tecumseh's coffers have not suffered a significant decline in sales tax dollars since the tribally owned grocery store opened for business.

Rader said any lost sales tax revenue in the food store business category was compensated by a $3,500 a month payment from CPN in lieu of sales tax for its smoke shop.

``They (CPN) realize it takes money for a city to operate,'' Rader said. ``In return, for the payment we help them with services like fire and police protection.''

Frank Oliver's Hardesty Grocery has been operating at the same location since the 1920s.

``It's not an ideal situation, competing with a tax-free entity,'' Oliver said.

``But it won't likely be the competition that puts me out of business. The two things that would be more likely to shut me down are government regulations or my health.''

Oliver said he saw a small decline in business when FireLake Discount Foods opened, but when the newness wore off, it was business as usual for the country grocer. He said the tribal store has brought increased traffic to the area.

Darrell Prather, director of operations for Pratt Food Stores, said he's concerned the impact from the sales tax on the tribal grocery store impact could trickle into other areas.

Al & James Foods owner Al Hendricks said the tribe has an 8 1/2 percent advantage over its Shawnee competitors.

He said those funds are placed into the tribal sales tax account and can be invested in its grocery business.

``I would say it's just free money coming into their pockets,'' Hendricks said. ``I don't mind competing with them _ I just want it to be on a fair level.''

Jim Hopper, president of the Oklahoma Grocers Association which represents more than 800 family owned grocery stores, ''... there needs to be a level playing field, either with legislation or compacts that require the tribe to pay sales tax or with legislation that wouldn't require a tax on groceries.''

Two pieces of legislation aimed at allowing the state to capture sales tax revenue from retail activity on tribal trust land in Oklahoma have been dropped.

Rep. Kris Steele, R-Shawnee, says the issue could become part of the negotiations over extension of Oklahoma-based Indian nations' renewal of tobacco and motor fuel tax compacts.

Steele, who says he will seek an interim legislative study of the issue, sees two factors driving this effort. ``One probably has to be the fact that we're facing a (budget) shortfall in our state,'' he said.

``Another thing, Native American tribes are growing and expanding... (and) a lot of businesses who aren't Native American probably feel like they're at a disadvantage, as far as sales tax.''

John A. ``Rocky'' Barrett, chairman of the Citizen Potawatomi Nation, said the presence of the tribe and its businesses is a major economic boost for the area.