The global pandemic had big impacts on just about every sector, from the neighborhood lemonade stand, to tourism spending, and the collection of an extra half-cent on taxable purchases by county government in Wisconsin.
Lemons, lemonade, entrepreneurship
In November 2019, a governor’s signature finally legalized lemonade stands in Wisconsin and preteen entrepreneurs in the St. Croix Valley were primed for big sales in 2020.
Oops. COVID-19 halted those plans, at least temporarily.
Prior to the signature, many, if not most, lowly lemonade stands operated illegally. Aggressive zoning enforcement closed more than one. Legislators wisely said, “Enough.” State law now prohibits local governments from imposing restrictions on lemonade stands. Anyone under the age of 18 can operate a stand on private property without a permit – as long as sales are under $2,000 a year.
With a year off, the stands are back in 2021 to the point of market saturation. There’s a lesson with too much of a good thing. Competition is fierce. The best sign so far has been, “Last Chance Lemonade” seen along the boulevard before customers turned onto a busy highway.
Long live the lemonade stands in the St. Croix Valley. If you appreciate hustle and enjoy a budding entrepreneur learning about small business, please consider stopping. And don’t forget the tip!
The Wisconsin Department of Tourism conducts an annual survey as a way to assess tourist spending for each county and then a cumulative estimate for the state. Bad news in 2020. Even with stay-cations and working from home, the pandemic put a hurt on tourist spending.
In St. Croix County, spending was down an estimated 24.5% to a little over $90 million. Across Wisconsin, spending was down almost $4 billion and declined 28.3% from 2019 to 2020. Less spending translated into fewer tourism-supported jobs, especially for college students during the summer.
Travelers and tourists help generate local and state tax revenues. For St. Croix County, tax revenues fell by almost 20% between 2019 and 2020, but still generated an estimated $11.9 million. With the economy opening up, a no brainer prediction for tourist spending in 2021 equates to a return to estimates rivaling 2019’s pre-pandemic numbers.
Sales tax collections
Wisconsin state law gives counties the option to collect an extra half-cent on taxable purchases or services. On a $10 purchase, the total sales tax is 55 cents, with 50 cents going to the state and 5 cents going to the county.
Those extra pennies add up. A $1,000 taxable purchase means the county earns $5 of the $55 sales tax bill.
In 2020, St. Croix County enjoyed its most bountiful year and collected $9.759 million. The half-cent has been collected in St. Croix since late 1987, so tens of millions have been realized. The sales tax revenues offset county expenses on capital improvements without raising additional taxes or borrowing money.
Even during a pandemic, St. Croix collected more than $1.1 million (+12.%) than in 2019. Were at-home workers taking advantage of flexible schedules in 2020 and ordering products online? Yes, and no.
Many businesses had COVID restrictions so it may have been easier to shop online. But in addition, the U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair enabled the collection of sales taxes by states at the point of sale, whether out of state or online, even if the seller lacked a physical location in the taxing state. This translated into a windfall for counties collecting an extra sales tax. Whether the purchases are large, small, online, or in-person, the sales tax is an important driver.
Here’s to an economy that’s opening up. Stop by a lemonade stand, travel to a community celebration disguised as a tourist, and buy a taxable item. All are meaningful.