Sales tax continues its steady recovery

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After a massive, unexpected surge in local sales tax revenue last month, February’s check is back to normal, for the most part.

On Wednesday, Texas Comptroller Glenn Hegar announced his office is sending the state’s taxing districts $911.9 million in local sales tax allocations for the February, 6.2 percent more than the same month in 2017.

February’s allocations are based on sales made in December by businesses that report their taxes monthly in addition to sales made by quarterly filers (for October, November and December) and 2017 sales by payers who report annually.

The grand total for Kilgore shows another year-to-increase, but it’s still lagging behind the numbers from two- and three-years back. It hammers home city leaders’ focus on budgeting conservatively and steadily rebuilding the tax base.

Kilgore City Hall keeps two-thirds of the monthly allocation while Kilgore Economic Development Corporation reaps the remainder. The local check for February 2018 shows slightly less than a 16.5 percent increase compared to the same month last year: at $730,731.86, this month’s allocation is $103,340.36 more than February 2017’s.

It’s the ninth consecutive month the regular allocation from the state comptroller’s office has shown a year-to-year increase.

Granted, Kilgore City Manager Josh Selleck warns against focusing too intently on the year-to-year comparisons – outliers often skew the data. For example, last month’s check included a substantial one-time payment that put the allocation more than 84 percent ahead of the prior year.

Similarly, Selleck said, this month’s sales tax allocation was shorted more than $80,000 in an audit adjustment.

“Three years ago when I started here I cautioned that we needed to be careful about taking too much stock in any one month’s actual return and instead focus on the detail,” Selleck said: while 16 percent ahead of February 2017, this month’s check is still 20 percent less from two years back, 24 percent less than three years ago. Had the city not been required to pay back $80,401 from an earlier overage, the return would have been about 30 percent higher than last February’s check.

While that’s more in line with recent figures, a 30 percent boost is still 11 percent less than the same month two years ago and it’s a 15 percent decrease from February 2015’s check.

“It looks like the overall trend is positive. However, each of the last three months have had some sort of substantial anomaly, either in them or in the prior year, which makes it more difficult.”

Those unexpected surges and falls factor into the City of Kilgore’s general budget strategy: preparing well-ahead of time for the peaks and pits of the community’s sales tax rollercoaster.

“Our goal is to maintain stability for our budget and for our residents,” Selleck said. He’s fielded concerns from residents about recent year’s tax increases: “We weren’t raising the tax rate because of short-term issues. Our council has processes and policies that avoid that.

“The reason the tax rate has gone up is in order to maintain, long-term, our community’s services … our math has indicated our rates need to be higher than they were when we went through the cuts 15 or 20 years.”

The rate peaked at 66.5 cents per $100 valuation in Fiscal Year 1995. In the following years, city leaders steadily cut the rate back to a low of 39 cents in FY2011.

“The analysis that we’ve used to steadily climb the rate was that at 39 cents in our best years we didn’t have enough money to maintain our roads and maintain our capital infrastructure,” Selleck said. “It’s the reason we’ve been talking about the need to catch up on our infrastructure. We’re trying to end up back at a place of sustainability where long term we can ride out the highs and lows and maintain a stable tax rate.

“I think most people would see the rate that we’re at currently is in line with most cities in our region. We hope to sustain there long-term.”

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