Sales tax revenues fall back below forecasts

After a wonderful sales tax report last month, May’s receipts, although more than $200,000 above April’s, plunged the City’s budget back into the red because those receipts were about 3 percent less than what was forecast, according to the numbers the City released today. The city went from $3,000 on the plus side this time last month to a $19,018.87 deficit, which, to be honest, is not a terribly difficult number to overcome.

Overall, sales tax receipts are a whopping 58.52 percent higher than they were this time last year which, again, indicates to me that the City’s financial prognosticators were a tad overly optimistic with their projections for this fiscal year.

The sales tax receipts for May were $661,516, compared to $444,310,03 last month. The problem is the City forecast this month’s receipts would be $684,008 and set this fiscal year’s budget accordingly. Here’s where I think the problem may stem from.. Last year, May’s receipts were 41.3 percent above those from the month before. This year’s budget predicted exactly that same growth, 41.3 percent, from the month before, but instead the receipts were only 31.3 percent higher.

Another interesting thing to note. During the first eight months of the last fiscal year, sales tax receipts exceeded forecasts every single month. This fiscal year, receipts have exceeded forecasts only four times during the same eight-month period even though the total amounts are higher.

And this may be an indicator not so much that the forecasts were way out of whack as it is that the economy is truly heading into a recession that, if you study economic cycles, is about due.