Sales tax revenues plunge City into deficit it may be impossible to get out of

Kyle’s sales tax revenues received this month were whopping $78,000 below projections plunging the city’s coffers into a possible budget deficit that will be difficult, if not impossible, to pull out of by the end of the fiscal year.

Right now the City is looking at a budget deficit of $97,717.46 with three months left in the fiscal year. To make up the deficit, the City would have to average $753,393.82 in sales tax revenues per month during the final three months of this fiscal year and that average figure is $30,868.09 more than the highest total received for any one month this fiscal year. So you can see the problem.

I think the time has come for the City Manager to brief the City Council on plans to make up the deficit.

The easiest way, of course, is not to spend as much as was originally called for in the budget for this fiscal year. But if this is the route the City plans to take, City Manager Scott Sellers needs to inform Council where he feels spending cuts can and should be made. It’s also possible the City has received more than it expected to in property tax receipts, or franchise, court, development and/or rec fees. But the Council should be made aware of that as well.

Sellers may also tell the Council he plans to make up the difference from reserve funds, which is always the last resort because that means the first item on the next fiscal year’s budget is designating money that should go to, for example, expanding and improving the city’s wastewater needs to replenishing the reserve instead.

For the first nine months of this fiscal year, sales tax receipts have exceeded projections only three times, meaning either the projections were far too optimistic or the economy is showing signs of slowing. You would need an economist, which I am definitely not, to argue whether these figures are signs we’re heading into a recession, although all you have to do is study historical economic cycles to know we’re slightly overdue for one.

Here are the actual numbers for June. The City projected $585,000 in sales tax revenues this month; the actual amount received was $506,314,41, which is $78,698.59 or 13.45 percent below projections. Before this month, the worst reporting period the City faced was December when receipts were $43,806.75 or 8.87 percent below projections.