Sales tax decline enters fifth month

June 13--"I think now we can go ahead and call it a consistent pattern."

For the fifth consecutive month, the state comptroller's sales tax allocation to Kilgore for June shows a year-to-year decrease compared to the same period in 2014.

Based on actual sales in April, the $760,099.70 check is $116,892.70 smaller than the previous year, a 13.33 percent decrease Kilgore City Manager Josh Selleck says is, unsurprisingly, linked to a dampened oiland gas industry.

That conclusions comes from a May analysis, he noted, looking back at sales in March. Data from April is not yet available.

"What we're seeing is a trend that is a decline specifically in the oil-andgas production and exploration part of our world," he explained. "Our wholesale, our retail and other more minor facets of our sales tax have continued to come in just as strong as they have previously.

"Anecdotally, speaking to several oil-and-gas companies, coming out of the wet spring companies are starting to mobilize again, and we will see some better numbers in a couple of months from now."

Statewide, Texas Comptroller Glenn Hegar reported this week, sales in April yielded tax revenues in May of $2.6 billion, a 5.2 percent increase compared to May 2014.

Distributing allocation checks this month totaling $629.2 million, "This marks the 62nd consecutive month of growth in sales tax collections," Hegar reported. "Sales tax revenue growth was relatively strong, spurred by consumer spending at retail stores and restaurants. Remittances from the construction, wholesale trade and services sectors were also up significantly.

"Collections from the oil and gas mining sector declined, as was expected, due to the slowdown in drilling."

The ongoing slump was apparent elsewhere in Gregg County: only White Oak and Lakeport showed a year-to-year gain in their June allocation checks, 39.8 percent more for White Oak alongside a 71 percent increase in Lakeport's relatively small check of $15,968.85.

In addition to Kilgore's 13 percent drop, Longview reaped 2.53 percent less in its sales tax allocation than in 2014, dropping almost $61,000 to $2,390,012.88. Countywide, Gregg municipalities' allocations totaled $3.32 million in June's checks, 4.53 percent less than the same time last year.

To the south, Rusk County's revenues increased by 2.67 percent overall, with a 2.09 percent year-toyear gain in Henderson's check and a 19.72 percent boost in Overton.

Locally, Kilgore's allocation puts the city at $7,720,943.92 in sales tax collections for the year, twothirds of which go to City Hall and its $6.6 million budget projection for Fiscal Year 2014-2015. The remainder benefits Kilgore Economic Development Corporation.

Three-quarters into the fiscal year, the city has reached 78.08 percent of its projection, averaging about $572,600 per month despite the past five months of year-to-year declines.

The "trend" is on city employees' minds as they develop the budget for FY16.

"I think at this point what you'll see is a very cautious budget that's structured in a way that it continues to react to some of our volatile revenues," Selleck said. "There's a potential that the impact of this will actually be felt next year in the tax base, the real and personal property valuations.

"As a result, what we're going to make sure is we continue with the city's sustainable budgeting habits and that we're conservative and that at the same time we give ourselves tools if mid-year we find out our budget won't make."

Tools, he explained, such as weighting the latter months of the budget with non-critical projects that can be easily cut.

"I think it's really about an entire financial planning methodology that structures the budget around the volatility that we have come to know and expect here in Kilgore," Selleck said. "It's a lot of little tools. There really isn't a single silver bullet. You structure your budget in a way that you have a variety of paths that you can take depending on the severity of your revenue loss."

It's too early to say whether the city will carry this year's $6.6 million sales tax projection into the following budget.

"We'll do a detailed analysis," Selleck said, "and we will most likely react to the trends that we are seeing."

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