Sales tax receipts and the “Wal-Mart factor”

For only the second time in the last ninth months, sales tax receipts for January exceeded budget forecasts, but the increase was minimal and was nowhere close to what it was the same month last year, which ended with Kyle more than a quarter of a million dollars in the red.

Kyle’s January receipts (which were just posted on the city’s website yesterday) were $536,291.12, which was $4,342.12 or .82 percent above what was forecast in the city’s FY2015-16 budget. That increase does not offset the below-forecast collections from the two previous months and leaves Kyle with a $36,287.19 deficit. Last year at this time, the city was $246,351.82 in the black, but in the last eight months of that year it fell more than half-million dollars below projections to finish the year with a $281,897.11 deficit. That’s a spectacular collapse.

Kyle ended FY 2015-16 with five consecutive months of sales tax receipts that were below projections and for the first four months of this year, receipts have exceeded forecasts in two of them.

So what is going on here? I posed that question to one high-ranking city staff member (I hesitate to use the person’s name, because I asked the question a couple of months ago and I don’t recall whether I stated our conversation was "on the record") and that person replied quite succinctly "It’s the Wal-Mart factor."

And there might be something to that argument. The Kyle Wal-Mart opened just about one year ago — last March 25, if my research is correct — and the city’s sales tax figures began to crater right around that same time. If Wal-Mart’s self-proclaimed shopping model is correct — consumers can spend less to buy the same items they previously purchased elsewhere — than it follows that less dollars spent means less sales tax collected.

This not an indictment of Wal-Mart and its business model — but a suggestion that perhaps Kyle study the effect a Wal-Mart opening in towns of comparative size to Kyle have had on their respective sales tax receipts and then adjust our forecasts accordingly, beginning with FY 2017-18.

Just sayin’.