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City sales tax collections: good news and bad news

Friday, February 12, 2010 by Austin Monitor

The City of Austin received welcome news this week as the State of Texas made its December sales tax figures available, giving Austin an 11.4 percent increase—or $15.9 million this month compared to $14.3 million in February 2009.


But the picture is not a simple one, according to Austin’s Chief Financial Officer Leslie Browder. It was adjustments from prior months that pushed the dollar amount up, not a true increase in economic activity. Without those adjustments, collections would actually have fallen


According to a memo Browder sent to the Mayor and City Council today, “exclusive of these two adjustments, the monthly percentage change compared to last year would have been a decline of 2.4%.” Overall, collections are down “0.1% compared to the same three months last year,” she said, noting that the figures refer to collections for October, November and December of 2009.


Browder said the city had “learned from the State Comptroller’s office that several businesses have been remitting taxes to another city that should have been remitted to the City of Austin.” Correcting that error brought the city $1.5 million more than it otherwise would have gotten.


Another wrinkle in this month’s report was the fact that “we experienced a significant negative adjustment of $486,000 in last year’s payment, and this also helps to explain the significant percentage increase we are seeing this month,” Browder wrote. 


She concluded, “While we are obviously pleased with the higher collections this month, it is too soon to draw a conclusion regarding revenue levels over the remainder of this fiscal year.” City financial planners had projected that revenues would be flat. 


According to figures supplied to the city, “Round Rock was down 3.3% for the month.  San Marcos, with a lot of retail, saw an increase of 3.7% this month.  Sunset Valley, which also has a lot of retail, experienced a decrease of 5.1%. Sales tax collections in Bee Cave were up 3.0% and Capital Metro was up 8.0% for the month.”


The picture was less rosy in the rest of the state, with only five of 20 top cities seeing an up tick in sales tax revenue this month. Houston saw a decline of 12.4 percent; San Antonio and Forth Worth’s revenues fell .2 percent, while Dallas lost

4.2 percent.

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