A not-so-green Christmas

It has been my experience in writing about various municipal governments in Texas that February sales tax collections usually reflect activity immediately preceding Christmas. In other words, consumer spending is usually higher during this period. In fact, according to statistics compiled by various sources, 30 percent of annual retail sales occur during the month of December. To reflect this, municipal governments normally anticipate higher sales collections in February — the month that reflects those December sales — than any other month.

Kyle is no exception. Last year, for instance, Kyle forecast it would receive close to 11 percent of its annual sales tax revenues in the month of February. For the first four months of the current fiscal year, city planners forecast Kyle would receive an average of $579,178.75 per month in sales tax revenues and the city exceeded the forecast amounts each month. For February, however, in anticipation (I’m guessing) of robust Christmas spending, the city forecast collecting $819,717, a whopping 41.5 percent above this year’s monthly average.

And, for the first time this fiscal year, Kyle’s collections fell below projections — by $36,029.55 — compared to average monthly surpluses of $42,903.54 for the first four months of FY 2017-18.

The obvious question is how did this happen, especially when most national retailers reported increased Christmas season sales in 2017 from 2016. I posed that question to Kyle Finance Direction Perwez Moheet who appeared to be baffled by the numbers. "I do not have any theories as to why the sales tax amount remitted by the Office of the Texas Comptroller of Public Accounts in February 2018 for the City of Kyle city is below budget projections," Moheet told me today.

That, however, won’t stop me from speculating. I can see two possible reasons for this. The first, and most likely one, is that more Kyle Christmas shoppers used on-line platforms rather than brick-and-mortar outlets to fulfill their Christmas shopping needs. I will admit I accomplished 100 percent of my holiday shopping on-line. And the great majority of these platforms don’t remit sales taxes back to the states where orders originated. The second explanation is that many of those who actually went to retail outlets to purchase Christmas gifts went to stores outside the city limits. I saw, for instance, where Best Buy reported a significant increase in December 2017 receipts over the prior year. In this leisure electronic age, Best Buy is a popular destination for Christmas shoppers and, of course, there is no Best Buy in Kyle, but convenient locations are in San Marcos and Southpark Meadows.

I’m not saying Kyle economic development gurus should drop everything in pursuit of a local Best Buy outlet. With those two aforementioned stores so conveniently located, I seriously doubt Best Buy would have any interest at all in a Kyle location. What I am suggesting, however, is, based on last year’s February receipts being 7.05 percent below forecasts and this year’s missing the projections by 4.4 percent, that perhaps city financial wizards not be quite so optimistic about Christmas shopping within the Kyle city limits.

Sales tax collected	Budget deficit	Percent deficit	FY percent Surplus	Feb. 2017 Collections	Variance from last year
$783,687.45	$36,029.55	4.40%	4.32%	$746,924.33	4.92%

You can read the entire report here.