The Texas Comptroller just released the September 2010 sales tax report showing that Southlake collections are up 8% for that month when compared to 2009 collections for the same period.
The report is good news for Southlake since sales tax represents over a quarter of expected revenue for the city’s general fund. Sales tax collections are also a good gauge of the city’s overall economic health.
“We watch sales tax trends closely,” said city manager Shana Yelverton. “We use these trends to understand the city’s business environment and to make important decisions to safeguard the city’s financial position.”
Double digit sales tax increases in prior years helped fund the new or expanded services that were needed to accommodate the growth of the city. Although the rate of sales tax growth has slowed, today the general sales tax is big part of the revenue stream used to fund police and fire services, park operations, the maintenance of roads, and other basic city services.
While recessionary forces have impacted these collections somewhat over the past three years, conservative budgeting has ensured that economic volatility does not adversely affect the budget.
“Collections started to decline in fiscal year 2009, and we adjusted our budget projections based on what we were seeing,” said Sharen Jackson, Finance Director. “For FY 2010 we conservatively projected a 5% decrease but with several good months under our belt we are ending the year about 8% above budget on this line item in the general fund.”
FY 2010 sales tax collections ended 1.90% higher than in FY 2009.
Yelverton notes that special sales tax levies for parks and crime control purposes are also key to the city’s ability to move forward on projects, even as the overall budget picture has tightened.
“We expect to collect over $4 million for parks and just over $4.3 million in the coming year for crime control with these special levies,” she said. “These funds go a long way to helping us achieve the goals of our master plans.”
Revenue from the special sales taxes is restricted for the purposes approved by Southlake voters and use of the funds is guided by citizen boards. “These sales taxes are helping us move forward with important park and public safety projects without having a detrimental effect on our operational budget,” said Jackson.
Southlake has become a regional retail and restaurant destination, so sales tax payers who don’t live in the city are also helping pay the bills. One local developer estimates the percentage of out-of-town shoppers as high 80%.
“As the economy recovers we expect continued growth in sales tax,” said Southlake’s Director of Economic Development Greg Last. “We are fortunate to be a regional draw – we are attracting shoppers and diners from outside the city who are helping us pay for city services.”