Baltimore businesses show strong sales tax numbers a year after bypass' opening
Editor's note: This is the second in a series of articles examining the local economy. The first installment, covering local manufacturing, appeared in the Sept. 30 edition of the Daily Express. The next story in the series will appear in the Oct. 21 edition.
Three-thousand drivers travel the new Highway 63 daily. Some use the bypass to do just that, bypass Kirksville and Baltimore Street traffic, while others are unaware a city of 17,000 exists to the west.
Before the new highway opened in late October 2011, some feared those drivers would take their dollars with them, leaving Kirksville's bustling Baltimore Street to dry up and disappear.
Nearly one year later, Baltimore Street is still busy selling goods, gas and food and its sales tax growth has outpaced the city's growth for the first months of 2012.
The route is functioning as intended and apparently has yet to make a significant impact one way or the other on the city or county economies as local economic indicators show either steady or increasing sales and tax collections.
"[Highway 63] is doing what it's supposed to do," said Missouri Department of Transportation Area Engineer Amy Crawford. "You've got those people that aren't coming to Kirksville, and they don't have to go through town so that the people that are coming to town can get through."
During its design and construction phases, detractors of the new Highway 63 route warned of business closures and failures along Baltimore Street due to drivers bypassing Kirksville and its hotels, restaurants and gas stations to spend their dollars elsewhere.
But neither the city nor the county are seeing such a decline, instead reporting that local economic indicators, such as sales tax figures which reflect how much people are spending, are steady or increasing at the same time as traffic also increases along the bypass.
Looking at gas stations and fast food restaurants along Baltimore Street, two areas expected to see the most impact from the fewer travelers, sales tax collections were up during the first quarter of 2012 compared to 2011 and higher than the city-wide growth.
City Manager Mari Macomber reported that those specific industries along Baltimore Street experienced their best first-quarter in four years, paying nearly $46,000 in sales taxes for the year's first three months. That $46,000 is up compared to 2011's $42,473. That specific region's tax payments have increased by about $4,000 each year since 2009.
"That increase is a good thing," Macomber said. "But we're not sure what it's attributed to, whether people are spending more money or not, or if it's an impact from the new [highway]."
The question is clouded by many variables, including fuel and food prices and other impacting factors like the economy and unemployment, but so far the figures support an optimistic outlook as they hold steadily increase.
Beyond Baltimore Street and its traveler-oriented businesses, the entire city is on track to collect a five-year high in sales tax revenue, totaling $1,539,816 as of July. At this time last year, the city had collected about $1.5 million.
But Baltimore Street fast food and gas industries are outpacing the city, having experienced an about 8-percent growth for the first quarter of 2012 compared to the same period of 2011. Citywide, sales tax revenues increased about 1.5-percent for that same period.
As sales steadily increase for the city, Adair County is also seeing little negative changes on the year, possibly hinting that fewer residents are traveling out of the county for their shopping or gas needs. In fact, the county is expecting its third straight year of tax growth since its last decline in 2009.
This year so far, the county is about even with last year's sales tax collections, up only about $3,000, a fraction of a percentage point.
While collections are mostly even, Adair County Treasurer Lori Smith said she's unsure of whether that is due to increased sales, increased prices or more local spending. Regardless, the county is on track to collect at least $1.48 million, having projected about $1.4 million in its 2012 preliminary budget this past spring.
"In theory, we thought we'd be down [on the year]," Smith said.
Smith also said she would be closely studying the final quarter of the year, which could show whether Kirksville had become less of a destination location for northeast Missouri's holiday shoppers. Either way, she said, the bypass would likely have little impact on regional shoppers coming to Kirksville for its stores and big-box outlets.
"Those last two months of the year will tell us if people are shopping, that will tell us if people are still coming to Kirksville," Smith said. "They should be, in theory. Anyone coming to shop, the bypass shouldn't change that. But as of now, the bypass is not affecting the county sales tax."
Private industry is seeing little impact with a local fast food chain owner/operator estimating a slight decline in customers and noted some changes in traffic primarily on holiday weekends or other big travel periods.
"Day in, day out there's not much impact," said Bob Gilstrap, owner and operator of the two Kirksville McDonald's locations.
He estimated a 3-percent decline in customers but did not exclusively blame the new highway. He observed that many customers that were skipping the Kirksville locations were being picked up by the Macon McDonalds.
"It's really been more of the summer traffic or the Thanksgiving travel that we'd expect to see the impact," he said. "We'll be anxious to see how we compare with the bypass after it's been opened for a full year."
He said any increases in fast food sales tax collections were likely due to increased sales, with prices steady over the past year.
Fuel prices have also been mostly steady at least year to year, although prices have been extremely volatile from month to month.
In October 2011 when the bypass opened, across the nation a gallon of unleaded regular cost $3.47, compared to current prices of about $3.70 per gallon, according to the U.S. Department of Labor.
Hy-Vee grocery store and gas station Director Jeff Suchomel said the chain had seen little impact since the bypass' opening, despite its unique location off of Illinois Street, one of the bypass's primary entrance and exit streets.
He said gas sales hinged largely on volatile prices and declined to share the grocery portion's sales numbers, but said his main input on the route has been that there is still a need for directional signage for area restaurants and attractions.
"We're missing the boat by not having signs out there," he said.
While only the first year of the new Highway 63 is nearly over locally, another northeast Missouri community has had the last 15 years to assess what kind of impact its bypass route has had on local businesses.
More than a decade ago, the town of Mexico, Mo., funded and opened a similar bypass route for Highway 54. Previously the highway had funneled through the town of about 11,000, similar to Baltimore Street and its previous duty as the former Highway 63.
Mexico Assistant City Manager Russell Runge noted that the immediate impact of having lighter truck traffic and ensuing development between the town and the bypass route.
"In our community, initially the thinking was it would be a detriment," Runge said. "In reality, in the long run, we have a lot of in-fill in that area [between the bypass and town] that adds to the community."
He said in the 15 years since the two-lane bypass opened, two hotels and a new Wal-Mart Supercenter also opened. He added that Mexico also experienced a burst of growth on its old highway route, including several new strip mall developments and businesses along the original highway.
"Our thoughts are that over the next 50 years, that property between the bypass and the current city limits will be attractive for in-fill with housing and retail," he said.