Sales tax dollars keep trend, still in recovery


Another sales tax check from the state comptroller’s office keeps the City of Kilgore ahead of this year’s budget projection, but the overall revenues are still well-behind the highs of prior years.

At $663,053.39, the latest allocation is a 20 percent increase on 2017’s March numbers, which are based on sales in January by businesses that report tax monthly. March 2018 is the 13th consecutive month the regular payment from Texas Comptroller Glenn Hegar has shown gains over the previous year.

Don’t get too excited, Kilgore City Manager Josh Selleck warns: while the year-to-year comparison looks good, it doesn’t tell the whole story.

Even adding in another sales tax check that shows a gain over the prior year, the City of Kilgore is still far short of the numbers of three and four years back.

“That still leaves us 20 percent down from our most recent high-year, 2014,” Selleck said, before a steep downturn in the oil-and-gas economy. “By this point in 2015, we were already seeing the down-swing. We were already $100,000 down from 2014.”

Halfway through the city’s 2017-2018 Fiscal Year, the community has collected about $4.53 million from the monthly sales tax checks issued by the state comptroller’s office. Kilgore City Hall receives two-thirds of the monthly allocations while the remainder benefits Kilgore Economic Development Corporation.

While glad for an ongoing trend of year-to-year increases, Selleck emphasized the sales tax revenues are still very much in recovery-mode.

“Keeping all things in perspective, for the year we’re still well down over where we think we should be,” Selleck said. “We still have about 20 percent to go to get back where we were for this month.”

With that steep climb still ahead, he also noted the progressive gains the community is seeing aren’t broad-based.

“As we look at each month’s data, we keep seeing the same trend: it’s one or two companies that are consistently performing much better and another one or two are having major fluctuations,” he said. “That’s not something that we would consider to be sustainable.”

Keeping all that in mind, Selleck said Kilgore City Hall will hold the course: sales tax remains an unreliable source of revenue.

“We’re going to doing what the City of Kilgore has done for many, many years, which is budget conservatively,” he said. “We’re thrilled about the upswing, but we’re not going to get so thrilled that we make bad decisions and harm our current financial stability.”

That said, Selleck says the current pattern in the city’s monthly sales tax checks could have a particular, positive impact on the next budget season.

“Looking forward to the Fiscal ‘19 budget, I’m hoping that if some of these trends continue we will be able to reduce the amount that we draw down on our fund balance,” he said. “It’s designed to carry us through a much-longer downturn.

Notably, “The Fiscal ‘18 budget still uses almost $1.4 million of fund balance in order to fund street maintenance and one-time projects,” a figure that could be replaced by sales tax revenues in excess of the current year’s $5.1 million projection.

Adding in the latest check, halfway through the fiscal year the City of Kilgore’s share of the monthly sales tax revenues is approximately $3.02 million, almost 60 percent of City Hall’s projection for FY18.