Sales tax improves 'worst-case scenario'

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The state comptroller’s latest allocation of local sales tax revenues to the City of Kilgore “will have an impact” on budget development, Kilgore City Manager Josh Selleck said, in a good way: officials can start to loosen their belts – however slightly – after tight years.

At $637,749.67, July’s check (based on May sales) is a 38.64 percent increase over the prior years numbers reported by Texas Comptroller Glenn Hegar’s office. Factoring in adjustments, it’s still better than 30 percent, Selleck said.

Adding City Hall’s two-thirds share into Fiscal Year 2017’s sales tax fund won’t work any miracles – “We are still now 30 percent down from our (June) peak around $950,000 three years ago,” Selleck said. It does, however, solidify a five-month positive trend and put the city on firmer footing as budget season picks up steam.

“It will likely mean that we’re not having to cut another three-quarters of a million,” the city manager said, “but that we still maintain a very cautious outlook when it comes to sales tax.

“Our goal in terms of sustainability is to budget around a worst case scenario – it improves our worst-case scenario.”

Statewide, Hegar announced Wednesday his office is distributing $679.9 to taxing entities across the state in July, nine percent more than the same month in 2016.

“The cities of Houston, San Antonio, Dallas, Austin, Fort Worth, Midland and Odessa saw noticeable increases in sales tax allocations,” Hegar reported.

Kilgore city officials projected a $5.1 million sales tax collection for FY2017 then hedged their bets with a $750,000 contingency, monies set-aside for low-priority road projects that could be delayed to cover a deficit in the sales tax revenues.

“Right now, based on the numbers we’ve seen the past couple of months, we think we’re going to end up a total of about $600,000 short,” Selleck told council members Tuesday. “That is a huge improvement from our worst-case scenario three months ago when I was envisioning $1 million short.

“We have such a dynamic sales tax. We could end up better. The nice thing is this provides us some real flexibility in next year’s budget.”

According to Selleck, the recent economic downturn and its stark impact in the oilfield has provided more long-term insight.

“I think we now know where the floor is on sales tax,” he said Friday, bottoming out in September/October 2016. Ten months later, with solid improvement since March, “From a budgetary standpoint, I think it means we can be a little bit less conservative in terms of what we do with sales tax this year and not have to plan for another quarter-of-a-million deduct.”

Selleck says he’ll probably recommend the council keep the $5.1 million projection of FY17 or the coming fiscal year, anticipating no significant cuts to the budget.

Looking ahead, “If it does make we’ll be able to start rebuilding the things that we’ve had to cover the past two years.”

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