July sales tax collections are arguably the best of the fiscal year, but city officials are not celebrating.
July allocations were up 7.5 percent from 2016, and sales tax is up 1.36 percent overall from 2016. There are two more months left in the fiscal year.
“We are pleased to see some improvement in the sales tax, but we are very cautious in our forecasting due to the volatile nature of sales tax,” Chief Financial Officer Keidric Trimble said.
Only one month was higher than July’s percentage increase in collections, and city officials said that is a fluke. March collections were up 25 percent, but that was because of a one-time audit adjustment taken out in March 2016. Comparatively, March 2017 looked exceptional, but it wasn’t because of increased spending.
The next-best month was January, which had a 6.1 precent increase over the previous year. The city relies more heavily on sales tax revenue than property taxes - with 42 percent of its budget coming from sales tax, compared to 27 percent coming from traditional property taxes. Sales tax revenue has failed to meet projections for two years, causing rounds of cuts and continuous hiring freezes.
In February, the city asked department heads for a final round of cuts for this fiscal year, which ends Sept. 30. That budget was considered to be a worst-case scenario. In the months since, no new cuts have been needed, and the city has begun work on its budget for next fiscal year, which begins Oct. 1. Trimble said the city doesn't anticipate changing the current budget. If collections come in above expectations, the revenue will be used as a baseline to start next year's budget.
“We will continue the frozen positions until the end of the fiscal year,” he said. “We are in the process of determining what we will do next fiscal year.”
BY THE NUMBERS
Sales tax collection percentages, by month
Oct. 2016, -2.76 percent
Nov. 2016, -2.96 percent
Dec. 2016, -5.28 percent
Jan. 2017, +6.1 percent
Feb. 2017, -6.25 percent
March 2017, +24.98 percent
April 2017, +1.68 percent
May 2017, -.87 percent
June 2017, +3.66 percent
July 2017, +7.51 percent
*Source: City of Tyler