Tyler

By CINDY MALLETTE
Staff Writer

Tyler’s sales tax revenue shows the city is sitting pretty, even amid headlines of economic struggle in the rest of the United States.

According to the Texas State Comptroller’s office, Tyler received a sales tax allocation of $2.84 million for the month of July. That amount is 9.18 percent more than the $2.6 million the city received in July 2007, and a 7.26 percent increase over 2007 year-to-date figures.

“I think it shows Tyler is continuing to grow as the regional center of East Texas,” said Mayor Barbara Bass. “There’s not a lot of softening, especially compared to statewide averages.”

What those numbers boil down to is this: People continue to spend — and spend more — in the city of Tyler. Higher costs for gas and food haven’t affected Tyler-area consumers the way it has many other parts of the country. In fact, the high gas prices may have played a positive roll in the city’s economic standing.

“Historically, we are better off largely because of the oil and gas industry,” said former Mayor Joey Seeber. “When oil and gas prices are high, historically we do well.”

Seeber served the city for 12 years, long enough to see economic ups and downs brought on by events such as 9/11 and the dot-com bust. When the economy is effected on a large scale, city leaders become concerned, because the city’s budget — and its ability to provide services to Tyler residents — is largely supported through sales tax revenue.

“Forty-seven percent of the city’s revenue comes from the sales tax,” said Daniel Crawford, chief financial officer for the city of Tyler.

That means the city has to be prepared for fluctuations in the economy. City Manager Designate Mark McDaniel said the city has a fail-safe mechanism in place that, should the city see hard times, residents would still get clean water and have police and fire protection.

“Because of the volatility of our revenue source, we budget very conservatively, and we keep 15 percent in a reserve,” McDaniel said. “When the rest of the state is soft, that makes us jittery.”

The reserve amount would benefit the city during a time of decline in spending, he said. It’s up to the city leadership to keep on eye on the economy and use smart business practices when planning the city’s future.

“Even in a flat year, we could have a problem because of uncontrollable elements,” said Ms. Bass. “There are some variables beyond our control. That’s why we need to have a rainy day fund.”

Ms. Bass credits former city leaders who she believes had excellent forsight and business sense when they laid out their plans for the city.

“Tyler, historically, has had strong leadership. They looked out beyond just the moment,” she said.

Seeber was one of those leaders who, along with State Sen. Kevin Eltife, developed plans for the Half-Cent Sales Tax that now funds all of the capital improvement projects in the city.

“It’s proven to be one of the best decisions we made,” he said. “We’ve had (millions of dollars) worth of capital improvements projects done. When you think about eveything that was done ... that would have been an aggressive bond package to sell.”

The Half-Cent Sales Tax has allowed the city to pay for projects like the new Glass Recreation Center, the Grande extension, Faulkner Park, and more, with cash and without having to go into debt. In fact, the city paid off the last of its general obligation debt in February. The sales tax, which brings in on average $11 million per year, has reduced property taxes to roughly 20 cents per $100 valuation — the lowest of any city with a population above 100,000 people, said McDaniel.

“We have more options because of that. We don’t have all varieties of debt that we have to pay back,” he said.

The Half-Cent Sales Tax is only part of the taxes collected at the cash register. The city also pulls in another penny on each dollar spent, and that goes into the general fund. The Half-Cent Sales Tax only funds capital improvements. The state takes the remaining 6.25 cents to pay for its operations.

Overall, the state of Texas saw a 2 percent increase in sales tax revenue over 2007. Crawford said that’s equal to the rate of inflation, so essentially, Tyler’s revenue growth was higher, around 5 percent. That’s about average for our city, he said.

“The sales tax money is actually greater than what you’d expect for a city our size,” Crawford said.

Tyler ranks among the top five in cities of its size, according to McDaniel, and it has a lot more than the oil and gas industry to thank.

“Tyler is a regional economy,” he said.

The city’s stand-alone offerings, like quality health care, educational opportunities and extensive retail, draw hundreds of thousands from surrounding communities into the city.

“We have about 805,000 people in our retail area,” McDaniel said. “That’s huge to us, in terms of what that means for our sales tax revenue.”

Ms. Bass said she’s glad to see Tyler’s economy holding strong, but she’s still cautious. She believes the city’s leadership needs to continue to use smart business practices.

“We’re very happy to see the revenue grow, but we also want to be realistic. We have to plan for a scenario when it doesn’t grow.”

Still, she thinks Tyler will continue to maintain its position as a regional hub of East Texas.

“We’re at the best time for the city of Tyler, I think,” she said. “Stay tuned!”

UNDER CONSTRUCTION: Work continues on the new fire station on Old Omen Road in Tyler on Friday. The construction is part of the improvements paid for by the Half-Cent Sales Tax.
((Staff Photos By Herb Nygren Jr.))