Positive sales tax returns continue

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Another month of substantial sales tax revenues meant a close examination of the numbers by Kilgore City Manager Josh Selleck.

April’s allocation from the state comptroller’s office is based on sales made in February by monthly payers: on the surface, they total about $790,000, a 43.5 percent increase compared to the same time last year.

A quick examination of the data reveals the latest allocation includes one business-filer’s late payment from a prior period as well as an early payment from another. Those impact the total, Selleck noted, in addition to an audit collection as the state retains funds to balance a past accounting error.

Without those items the total would be down about $70,000, he said, which puts the year-to-year gain closer to the 30 percent range the city’s seen in recent allocations.

Year-over-year, that’s still a gain, still more than the much-larger City of Longview saw in this month’s check. It’s not an apples-to-apples comparison, of course, with key differences in size as well as the make-up of sales tax-payers.

A large portion of Kilgore’s increase comes from its oil-and-gas foundation, and a large portion of that comes from a couple of payers – emphasizing local officials’ philosophy of not relying on sales tax revenues to fund ongoing operations.

“I still have the same concern that there are just a few, one or two, taxpayers now who are responsible for the vast majority of all the growth we’ve seen this year,” Selleck noted. That said, “The base is still moving in a slightly positive direction. Our non-oil-and-gas related, general retail taxpayers are still trending in slightly positive ways, year-to-date in the one percent growth range.”

Other communities are experiencing similar gains in that area, he added.

“The entire region is seeing a bump,” Selleck said. “We’re going to be consistent in terms of what everyone else is seeing. Some portion of their growth is related to standard retail, some of it is related to oil-and-gas,” but not in the four percent growth-range Kilgore is seeing on that front.

It boils down to what growth will be sustained.

“We’re still seeing positive trends, but again we have to be careful how we treat this,” Selleck said. “If this is one or two businesses that are responsible for, in this case, $1 million worth of growth, we probably want to continue the council’s budget methodology that says we’re not going to try to pay for critical positions out of that portion of our sales tax.

“Our sustainable budget has to be funded based on our sustainable revenues,” whereas sales tax revenues “can be used for things like road projects and parks projects, whatever those one-time uses are.”

The City of Kilgore collects two-thirds of the community’s sales tax revenues. Kilgore Economic Development Corporation receives the remainder.

“The solution is recognizing the temperamental and dynamic revenues and never becoming dependent on them,” Selleck added. “This isn’t a problem to solve. This is a wonderful blessing that Kilgore receives that no other community I’m aware of receives – this kind of bump in good years.

“The long-term philosophy here is to never be too dependent on those revenues. We should never depend on those revenues to fund life-safety operations or critical operations.”

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