- The Washington Times - Thursday, May 23, 2002

RICHMOND (AP) Virginians drank more alcohol and spent more money at the hardware store, but they bought less clothing and stuck with the old furnishings and cars last year.
After nearly a decade in which Virginia consumers increased their purchases by an average of $3 billion every year, taxable sales rose just $64 million last year to $68.7 billion, according to the state Department of Taxation.
That stumble resulted in a lot less cash for the state, local governments and schools all of which depend on sales taxes for a sizable chunk of their funding.
In a typical year, sales-tax collections swell by a reliable $135 million. Last year's increase was $2.9 million.
"That's a pretty dramatic drop," said Gilbert R. Yochum, an economics professor at Old Dominion University.
It's especially painful, Mr. Yochum said, when governments and businesses base their plans on past growth.
"You get used to having all this extra money around," Mr. Yochum said. "You lock yourself in, so it's devastating when things change."
Economists say 2001 started going sour with the first stutter of the stock market in the spring. The terrorist attacks of September 11 sealed its fate. Americans became more cautious about spending. Budget cuts, lost jobs and closed businesses followed.
Northern Virginia, the state's economic engine, was hit especially hard because of the terrorist attack on the Pentagon. Ronald Reagan National Airport was closed for a month. Tourists avoided the area for much longer.
Across the state, not even the lure of zero-percent financing could cure consumer caution.
Despite the unprecedented offer of no-interest loans, Virginia dealers sold 409,650 vehicles in 2001, a drop of 1,500 from the year before.
Sales of home furnishings dipped 4.7 percent, and hotel spending dropped nearly 10 percent.
Sales of building materials increased 5.2 percent, food sales rose nearly 2 percent
and at least one retail category saw a significant jump in customers.
Alcohol sales went up 14.6 percent to $342 million across the state.


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