MOBILE, Alabama – November's sales tax figures are slightly more than a half million dollars less than what the city generated last year, the city's finance director said today.

Barbara Malkove, during a presentation before the Mobile City Council, said that sales taxes collected during November were $552,781 less than last year.

It was the first financial report Malkove provided since the city's sales tax increase went into effect Nov. 1.

In addition, the city's general fund lost $5.8 million during the final three months of 2012, Malkove added. The sales tax is the city's biggest revenue generator supporting its general fund that pays for basic city services such as police, fire and public works salaries and equipment, among other things.

"When sales taxes received are less than budgeted, the general fund shows the greatest loss," Malkove said. "The general fund has had to absorb the decreased revenues."

Malkove said she is hopeful that sales taxes are stronger in December, citing brighter national projections. She also said expenditures "continue to be under budget" and about the same as December 2011.

Both Malkove and City Attorney Larry Wettermark pointed to an uptick in Internet sales that led to a sluggish November. Malkove cited a comScore, Inc., "Black Friday" report that showed Internet sales reaching a record $1.04 billion during the most popular shopping day of the year.

"E-commerce, while only 10 percent of consumer spending, is growing much faster than bricks-and-mortar retail shops due to low prices, convenience, faster and sometimes free shipping and wide selection," Malkove said. "The effect of the lower Internet prices is also driving the stores to also reduce prices ... lower prices lower sales tax receipts."

Malkove's report did not include projections of Internet sales in Mobile.

"This isn't a trend that doesn't affect Mobile," Wettermark said. "It is extremely disturbing that the trend will continue. The sales tax is the backbone of the revenue source driving all city basic services. It's creating an unfair situation with regard to local merchants."

City Councilman William Carroll said change would have to come from federal and state officials.

"We are losing a lot of revenue right now from Internet sales especially with us being a sales tax-based budgeting," Carroll said. "It needs to be addressed."

Malkove declined to speak with the local media after the council meeting, saying she needed to discuss the financial report first with Mayor Sam Jones. Jones was not at Tuesday's meeting, as he is in Washington, D.C. attending the U.S. Conference of Mayors meeting.

City spokeswoman Barbara Drummond said more accurate sales tax figures will be available in a couple of months once all retailers begin to fully collect the tax increase.

"Usually that will taper off as the year goes on," Drummond said, adding that some businesses in Mobile are not "remitting" the sales tax increase back to the city.

She said the city will have revenue inspectors, in the coming months, making sure the extra tax is collected from all commercial entities.

The Mobile City Council approved on Oct. 2 a penny sales tax increase from 4 cents on the dollar to 5 cents, with an expiration date set for July 31, 2015. The increase makes Mobile's total sales tax rate in the city, including state and county levies, to 10 cents on every $1 spent.

The tax was originally increased to attract additional revenue into the city.

The increase means is supposed to allocate 25 percent equally into four funds: the city's general fund, escrow account, economic development and capital improvement funds.

The entire extra revenue generated from the sales tax rate increase is supposed to be $25 million. Part of the increase will go toward a $5.1 million lease agreement approved Dec. 4 to purchase new police, fire and public works vehicles.