City finishes year with a quarter million dollar sales tax deficit

Last year, sales taxes not only increased dramatically, they were actually 13.56 percent above the bean counter’s projections. "Boom times are here! This growth in sales taxes will continue unabated!" This type of myopic thinking led the city to project the city would collect 18.56 percent more in sales taxes this fiscal year than last.

Unfortunately, that turned out not to be the case. In fact, the final numbers are not even close to those rosy predictions. Sure, sales tax income increased, but they increased, somewhat coincidentally, by 13.56 percent, not the 18.67 projected, and thus the city finishes the current fiscal year with what essentially amounts to a $281,897.11 budget gap.

Practically speaking, that’s not as serious as it might sound because the city not only has plenty of reserves to cover the deficit, but it was also fortunate that the budgeted number of police officers were never hired, so that money more than compensates for the quarter million in lost sales tax revenues.

But it should also be noted that, of the 12 months that make up the year, sales tax revenues exceeded projections in only three of them. September’s revenues of $519,583.11 were 9.68 percent below the projections for the month and it marked the fifth consecutive month revenues failed to meet expectations.

Frankly, however, I don’t expect to see a repeat of this in the fiscal year that begins nine days from today because the budget for FY 2016-17 is only forecasting a 9 percent increase in sales tax revenues over this year’s collections. In fact, I could argue that, in actual dollar figures, the forecast for FY16-17 is downright pessimistic in that expects the total increase in sales tax revenues to be $187,903.40 less than it was this year.

It took one bad year for those bean counters to come to their senses, to realize that "good times are not the same as boom times." But come to their senses they did and we can all celebrate that because it should give the city far more financial flexibility beginning Oct. 1.