Kyle’s economy considerably stronger than rest of state

 Directly contradicting national and statewide economic indicators in the midst of a global pandemic, Kyle’s economy seems to be stronger than ever.

Mayor Travis Mitchell said today he attributes this fact in large part to Kyle’s proximity to Austin as well as the city’s solid economic foundation and the unprecedented growth in the city’s business sector. Be that as it may, the numbers don’t lie.

While the latest statewide sales tax figures show a revenue decline of 6.3 percent over the same period last year, Kyle’s receipts actually reflect an astounding 19.58 percent increase during that same time.

The state’s economic woes, according to Texas Comptroller Glenn Hegar, can be traced to the under-performing oil and gas sectors because, Hegar said, “well drilling and well completion remain depressed.” But Hegar also added “Receipts from the information sector were also notably down due to the federal ban on sales taxation of internet access service.”

At the same time, the comptroller said, retail trade was the only sector to show any kind of growth. “Increased collections from retail trade reflected continued heightened spending for home improvements in response to the pandemic,” Hegar noted.

Kyle obviously benefits from the fact that its economy is based in large part on retail trade and not on oil, gas or “the information sector.”

Sales tax is the largest source of state funding for the state budget, accounting for 59 percent of all tax collections. In Kyle, however, sales tax revenues account for only 27 percent of collections, according to the FY 2020-21 budget, compared to 30 percent that comes from property taxes.

The Federal Reserve Bank is reporting the nation’s economy is beginning to show signs of improving but “not enough to offset earlier losses, including the 5 percent decline in real GDP at an annual rate in the first quarter, signaling the onset of the 2020 recession.”

Sales tax surplus takes a hit, but don’t worry

First the bad news: June’s sales tax collections were below forecasts. Not by much, mind you — under 2 percent — but still below. Now the good news: For the fiscal year so far, the city is in the black and, barring an economic collapse bordering on the catastrophic, appears to be heading for a year-ending surplus, unlike last year’s somewhat embarrassing showing.

The city collected $611,511.36 in sales taxes this month, a figure that is $10,665.64 or 1.71 percent below what the fiscal year budget anticipated, but $42,640.39 or 7.5 percent more than was collected during this same month last year. Those last two numbers are important because they provide a convincing argument that the city is not heading into any sort of cataclysmic economic event that would result in the city ending the year with a budget gap caused by problematic sales tax projections.

To date, the city has collected $162,739.35 more than projected in the current fiscal year budget. You can do the math yourself and if you do you can see for what the average monthly deficit would have to be in the final three months of this accounting period for the city to end with a deficit. And when you consider this was only the second month this fiscal year that collections fell below projections, you can easily see why I am optimistic the city will end this fiscal year in the black. Not only that, the only other time collections failed to meet forecasts — in February (a notoriously under-performing month in Kyle’s collections for reasons I guessed at back then) — the shortage was in the neighborhood of $36,000, a significant number, to be sure, but still $18,000 less than the city would have to average losing in July, August and September to erase the current surplus. That’s why I feel confident in predicting that’s not going to be the case, unlike 2017 when the city finished with a sales tax budget gap of $286,810.12. And even then, collections for the final three months were a minus $72,398.73, less than half of the current surplus.

In short, as far as sales tax collections go, the city is looking good.

Sales tax collections barely exceed forecasts, but …

Before the month completely passes us by, I should take the time to say a few words about May’s sales tax collections. OK, so it wasn’t as much of a surplus as it has been for most of the year, but a surplus is still a surplus and recent history argues any surplus is something worth celebrating.

The city collected $7,651.87 more in sales taxes this month than it had forecast, which means, so far this fiscal year, sales tax revenues have exceeded projections seven out of the eight months. Last year at this time the city had four months of under projections and May of 2017 was the worst month of that fiscal year, up to that time, with a whopping deficit of $77,828.24. That’s a turnaround of $85,480.11 between the two Mays and you know what? Eight-five large this month, another 85-grand next month and, before you know it, you’re talking nice money here. According to the city’s latest Meet-and-Confer agreement, $85,223 is the base pay for a Kyle Police lieutenant with more than four years of service. You see where I’m going here.

And that turnaround came about with a modest 1 percent increase over projections. The only month to record a smaller increase this year was November when it was .68 percent ($4,796.88). Heck, for the year to date, the city is 3.51 percent ($173,404.99), or good enough for a pair of four-year lieutenants or eight police cadets. And we’ve still got four months to go.

May’s $774,627.87 in collections topped last year’s by a comfortable 11.42 percent ($79,388.11).

April sales tax revenues continue surplus trend

The city’s sales tax revenues exceeded forecasts by 2.89 percent for the month of April and were almost 6 percent higher than last year’s receipts for the same month. This marked the sixth time in the seven months of the current fiscal year that revenues were above expectations. It translates into a budget surplus of $165,753.12 for the year.

The sales tax report is a significant turnaround from last year when, at this same time, the city had recorded three months of lower-than-anticipated receipts in the first seven months of the fiscal year — a reflection of a more conservative estimate for the current budget cycle.

April’s sales tax revenues were $519,728.54 — $14,609.54 more than forecast and $29,363.54 more than was collected in April 2017.

You can see the entire sales tax report here.

March sales tax revenues: back in black

My suspicions that the city’s financial experts grossly over estimated the amount of money local Christmas shoppers would spend in retail outlets located within the city limits seemed to be re-inforced — if not necessarily confirmed — by this month’s sales tax reports showing revenues greater than forecast.

This month’s figures, which, for all practical purposes, reflect January spending, were $15,559.07 higher than what the fiscal year budget projected. It’s worth noting, however, that the $532,405 projected for the month was a significant $287,312 less than what the city predicted it would haul in the previous month.

This marks the halfway point in the current fiscal year and for those first six months the total amount of sales tax revenues collected is $151,143.58 above what was forecast and for five of those six months, receipts exceeded projections. The only exception was last month — the one that reflected the Christmas shopping season. At this same point last year, the city’s sales tax receipts fell below expectations three of those first six months.

Here’s this month’s table:

Sales tax collected	Budget surplus	Percent surplus	FY percent Surplus	Feb. 2017 Collections	Variance from last year
$547,964.07	$15,559.07	2.92%	4.12%	$510,619.20	7.31%

You can read the entire report here.

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.

Sales tax collections: What a difference a year makes

January’s sales tax collections continued to exceed budget forecasts for January, but that reflects less on Kyle’s economy — although it seems to be growing (see variance from last year in the chart below) — and more on the more conservative forecasts for this fiscal year.

January’s figures reflected the fourth (out of a possible four) consecutive month this fiscal year that sales taxes have surpassed the budget’s forecast. At this time last year, receipts had dipped below forecasts for two of the four months and overall the city was $36,307.20 below forecasts for the fiscal year. This year it is $171,614.06 on the plus side. That’s quite a turnaround.

However, that’s because the estimated sales tax growth between January FY 2016 and 2017 was 11.3 percent. The estimated growth for this fiscal year, on the other hand, was a far more modest and realistic 3.6 percent. There you have it.

(Updated at 3 p.m.) "I’m very proud of the 13 percent increase in sales tax revenue collected so far this year," Mayor Travis Mitchell said today. "It represents something very important to our city — economic diversity. Only through economic diversity can we begin to increase our quality of life without a corresponding increase in property taxes. We are laser-focused on keeping this trend going. The next big push is to land a large employment center. I’m confident we’ll get it done soon.

"As to the forecasts being low, I think we learned an important lesson through last year’s deficit," Mitchell said. "To me, you should never budget for best case scenario. And in this case, our more conservative approach has provided us the opportunity to record a surplus in the sales tax budget. That’s a good thing and those monies will be put to good use." (End updated material)

Here’s a quick glance at January’s numbers:

Sales tax collected	Budget surplus	Percent Surplus	FY percent Surplus	Jan. 2017 Collections	Variance from last year
$618,416.40	$62,581.40	11.26%	7.41%	$536,291.12	15.31%

You can read the entire report here.

December a robust month for city sales tax collections

Sales tax collected	Budget surplus	Percent Surplus	FY percent Surplus	Dec. 2016 Collections	Variance from last year
$602,893.26	$54,506.26	9.94%	6.19%	$515,743.09	16.9%

You can read the entire report here.

November sales tax table

Sales tax collected	Budget surplus	Percent Surplus	FY percent Surplus	Nov. 2016 Collections	Variance from last year
$710,335.88	$4,796.88	0.68%	4.5%	$655,907.41	8.3%

You can read the entire report here.

October sales tax collections

Sales tax collected	Amount over/under budget	Percent over/under budget	FY percent over/under budget	October 2016 Collections	FY variance from last year
$556,683.52	$49.729.52 over	9.81% over	9.81% over	$491,669.19	13.22% over

You can read the entire report here.

What were they thinking at City Hall last year?

Maybe a better question to ask is "What were they drinking?".

This is yet another in my regular monthly installments on how poorly sales tax receipts fared this month against expectations. The raw figure is $53,901.03 meaning the city received that much less than the budget forecast it would receive. On the ledger, that means the city is facing a $214,411.59 budget gap for this fiscal year which city officials constantly try to reassure me is no big deal because it has the reserves and the empty budgeted staff positions that more than compensates for this shortfall.

But those same raw figures still leave me scratching my head. The $568,870.97 the city received for the month of June is a nice 12 percent more than the receipts from the same month last year. Most cities would be ecstatic to experience a 12 percent increase in sales taxes per month. I've heard Buda projects a measly 8 percent month-over-month sales tax increase. For them, a 12 percent hike is manna from heaven, but for us it is not good news.

Here's the kicker, however: the city’s forecast was that Kyle would actually collect $622,722 in sales taxes this month. That’s a whopping 23 percent increase over last year’s number. 23 percent!!!! Are you freaking kidding me?

For the year, the city has collected 10.03 percent more than it did last year, but the forecast was for a 14.58 percent increase in sales tax receipts after nine months of the fiscal year.

Travis Mitchell seems to be the only person on the City Council who’s overly concerned about all of this and during last year’s budget negotiations he tried, unsuccessfully it turned out, to cut Finance Director Perwez Moheet’s sales tax estimates. Look, I respect Moheet. I consider him one of the better municipal finance directors I’ve come across in my 50+-year professional life. But it doesn’t take that much of a financial wizard to realize that with the type of growth Kyle is experiencing, the city’s sales tax numbers will continue increase, but the percentage of that increase will most likely decline year-after year.

I would like to see Mitchell or someone else have the courage this year to hold the city’s feet to the fire and insist on a budget that forecasts, at the most, a 10 percent increase in sales tax receipts — maybe even 9.5 percent — during the upcoming fiscal year. That amount of an increase is still worth celebrating and it will send a signal to those looking to invest in our community that (1) we appear to be fiscally realistic about our financial revenue expectations and (2) there’s nothing funny seeping into the city’s water supply.

May sees worst sales tax deficit of the year

Kyle’s sales tax receipts took their worst hit of the fiscal year in May, accounting for nearly half of the year’s entire sales tax deficit in this month alone.

Receipts were a whopping $77,828.24 or 10.07 percent less than what was anticipated for the month. That amount represents 48.6 percent of the entire year’s sales tax deficit of $160,510.66 and is $21,198.57 more than the previous worst month of this fiscal year. That earlier drop-off was attributed to lower-than-expected sales during the Christmas holiday period. The May figures usually represent money consumers spend in March.

Although the actual receipts were 5.1 percent higher than May 2016, this month marked the third straight one where that year-over-year increase has also declined.

The numbers don’t seem to be a reflection of the local economy — although the city’s population has increased over this same time last year, it’s doubtful that is has increased by 5.1 percent in a single year; it’s more likely this shortfall was caused by overly optimistic financial forecasts by city number crunchers. However, in little more than two months we’ll learn if this year’s figures result in a tempering of sales tax receipts expectations when those same crunchers announce their preliminary forecasts for FY 2017-18 at the July 29 unveiling of the city manager’s proposed budget for the upcoming fiscal year.

On sales taxes, parades, Sunday deadlines, administering by committee

• Kyle’s sax tax receipts for April were $1,159 more than anticipated for the month, but the city still has yet to overcome its dismal haul from two months ago. For the year, Kyle’s receipts are $82,682.32 less than what the fiscal year budget forecast. Again, that does not mean the city is that much in debt, only that it has that much less available to spend than it planned. Plus, the city’s strong reserves more than compensate for this budget gap. The main contributor to this gap appears to be the fact that consumers spent far fewer sales tax dollars during the Christmas holiday period than anticipated, resulting in February’s receipts being $56,000 less than forecast. April’s numbers were a scant 0.24 percent above what was projected; however they are $46,055, or 10.37 percent, higher than April 2016's collections, a sign that the local economy continues to grow.
• Interestingly, Mountain City has established a Sunday deadline for those wishing to be considered for its city administrator position. Sunday seems like a strange deadline to me, but who am I to tell Mountain City how to conduct its business. I have to wonder, however, who gets to man City Hall that Sunday to wait around in case Federal Express brings one final delivery or someone personally delivers a resume in a plain brown wrapper sometime before 5 p.m. As outlined in the official job description, "The city administrator (CA) serves as the administrative manager under the direction of the mayor and city council and is responsible for the efficient administration of the affairs for the city. The CA will work closely with the mayor, council, city personnel and support staff towards accomplishing short and long term objectives. The CA supervises and coordinates city activities to ensure that all laws and ordinances are faithfully performed and enforced. The CA should be a positive leader, a self-starter, and a person of high moral character and integrity. The CA is expected to be responsive to the needs of all stakeholders and strive to work toward positive, effective, and fiscally responsible solutions." The notice also says the city administrator must be a resident of Mountain City, so I guess that means anyone wishing the job who lives outside the city only has less than a 100 hours in which to relocate.
• In preparation for writing the story on possible fixes for the Lehman High neighborhood parking kurfuffle, I asked city spokesperson Kim Hilsenbeck whether the city manager had given any consideration to forming a separate department to handle any and all situations involving mobility and the city’s street infrastructure. Her reply: "We have an internal committee that functions the same as the department you proposed. The committee is made up of the chief of police, our public works director, the city engineer, and several members of our city administration team. Those folks make decisions about mobility infrastructure together." So therein lies the problem, folks. By definition, such a committee could not accomplish what a separate department composed mainly of engineers trained in municipal mobility issues could achieve. It could, however, produce proposed ordinances like the one the City Council wisely and unanimously shot down earlier this week. As we’ve recently seen, such a committee can come up with answers to a problem, but not solutions.
• Received a notice from the Hays CISD yesterday announcing it will be staging a parade eginning at 10 a.m., Saturday, May 6, the day, according to the notice, that "marks the anniversary of the vote taken in 1967 to consolidate the Buda, Kyle, and Wimberley school districts into one." I’m trying to convince myself that it’s just a coincidence that this parade will take place the same time the Kyle City Council will be conducting its first workshop to consider ideas for the 2017-18 fiscal year budget. And I am the last person in the world to be considered a conspiracy theorist. But, still …

City’s budget gap shrinks a tad

March’s sales tax collections were 1.81 percent higher than forecast in the current budget, reducing the city’s budget gap to $83,841.57.

Let me remind everyone, this does not mean the city is $83,000-plus in debt. It only means it has that much less to spend this year than it anticipated, kind of like that salesperson whose commissions were not as much as he or she expected and possibly budgeted for. It's also important to note that this $83,000 represents a miniscule 0.39 percent of the City's General Fund forecast for the current fiscal year and only 1.13 percent of the total forecasted sales tax revenues.

For the first six months of the current fiscal year, sales tax receipts have surpassed expectations in half of them. The problem is the average of three surplus months was $6,815.20 while the average for three deficit months was $34,762.33. That’s a significant difference.

The budget called for the city to collect $501,544 in sales taxes for March, the second lowest of any month so far this fiscal year. The collected amount was $510,619.29. These figures represent sales for the month of January.

It should also be noted that sales tax collections aren’t an ideal gauge of retail sales. Many food products are exempt. Taxes on motor vehicle sales and rentals are reported separately. The data is not seasonally adjusted, so it can only be compared to the same months in prior years. But online sales are taxed in Texas and are included in this tally. So tax collections are an unvarnished approximation for a large part of retail sales.

It is also worth noting that sales tax collections to date this fiscal year in Kyle are 10.65 percent higher than they were for the first six months of the previous fiscal year, which contrasts with the state as a whole, which is averaging 2.9 percent less in sales taxes than the year before. This is because statewide sales tax figures are far more dependent on manufacturing, wholesale trade and oil- and gas-related sales tax receipts than the Kyle economy is and those categories have been drastically under performing of late.

At the same time it is highly doubtful that the city’s population is 10.65 percent higher than it was the same time last year. So there’s that.

Hard (hiring) freeze forecast for Kyle

February’s sales tax numbers have been posted and, simply put, they border on being disastrous — over $56,000 below projections which more than doubles the city’s budget gap.

What makes this even more troubling is what happened last year when the city’s sales tax receipts fell drastically below projections in the last months of the year. Last year's February receipts were actually $14,478.73 above projections, but the city was already $33,542.28 in the red and it finished the year $281,897.11 dollars below projections.. That’s a loss of $248,354.83 during the final seven months of FY 2015-16. This month, however, the city is $92,916.86 in the red — obviously, a far weaker financial position than at the same time last year. A decrease of that magnitude this time around could put the final budget gap at $341,451.69 or 1.6 percent of the entire General Fund budget for the fiscal year).

Council member Travis Mitchell, who unsuccessfully lobbied his council colleagues to reduce the sales tax projections during last year's budget preparation negotiations, said he was "frustrated" by the budget gap.

"I was concerned about the sales tax projections during budget preparations," Mitchell said, via e-mail. ""That's why I advocated reducing our forecast by at least $200,000. My attempts to rein us in were unsuccessful and I'm absolutely frustrated by the deficit. There's really no excuse for being this bullish in our projections."
Now the city is not about fo plunge into some kind of financial abyss — there’s plenty in the city’s reserves to compensate for these losses. But I’m convinced efforts should be made to find ways to reduce expenditures in the current budget and one area I would start with would be to institute a hard hiring freeze for the remainder of the fiscal year, or until such unlikely time before Sept. 30 when the city’s sales tax receipts are back on the plus side. The city seems to be functioning quite well with the employees currently on the payroll, so there’s no reason to supplement that number by filling any empty FTEs — whether they be new positions or those lost to attrition — between now and the end of the fiscal year.

Mitchell did not second my idea of a hiring freeze but he did say "Something needs to be done. I have no confidence in our Q3/Q4 projections."

Again, you can read the entire sad tale of the city’s sales tax receipts here.

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’.

Budget gap widens as sales tax receipts continue to fall below forecasts

December’s sales tax receipts were $10,988.91 below forecasts, widening the city’s budget gap to $40,629.31, which is definitely not insurmountable but does raise some concerns because of where the city was at this same exact point last year.

Instead of being $40,000 in the hole at this time last year, sales tax receipts through the first three months of the fiscal year just ended had provided the city with a $187,932.03 surplus. However, by the end of FY 2015-16, the city was close to $282,000 below forecasts, which means that during the last nine months of the fiscal year, the city lost $469,000. A repeat of that would put the city in a half-million hole this year and that’s not exactly where it wants to be.

This is also troubling because this fiscal year the city scaled back projected increases, forecasting almost a 5 percent less gain than they predicted last year. I asked the city’s crack Finance Director Perwez Moheet about this and he promptly replied "I do not have any theories as to why sales tax receipts continue to fall below forecast."

This is not alarming news because the city has plenty in reserve to cover this but it is disturbing because it appears to be a trend, but a trend of what remains a mystery. The first answer that comes to mind is that a recessionary economic trend is developing but I’m not sure I can buy (pardon the pun) into that theory since in actual numbers, sales tax receipts this month were $65,560.84.greater than they were for last December and for the year, to date, receipts are 12.74 percent higher than in FY 2015-16. So I’m simply going to go with the notion that the city’s outlook for its ciizens’ spending capacity was rosier than the reality,

That dreaded budget gap is back and earlier than last year; more disclosure needed

Let’s say your neighborhood or homeowners association has in its plans for the upcoming year a series of repairs, renovations and additions but, as it prepares its budget for all these projects, discovers that what it needs to accomplish will cost, say, $1,375 more than can be covered via the regular monthly association assessments or dues.

Then someone on the board says "I’ve got an idea. Remember when we sponsored that fund-raising community-wide garage sale last year? We netted over $800 on that project. Let’s have another one of those but this time we’ll expand it to include a bake sale, but not one where residents just sell their homemade pies, cakes and cookies. Let them sell casserole dishes; canned peaches; homemade jellies, jams and preserves. Include arts and crafts so that our residents can try to sell homemade candles or their own artwork."

The rest of the board agrees, the event is held, and it nets $1,135. You can look at this result in two ways. The first way is to congratulate yourself for having a much more profitable event than the one the year before. But the second is that you fell short of your goal and now decisions must be made on how to scale back your repair-renovation-addition plan.

That’s sort of the position the City of Kyle finds itself in today. It can congratulate itself in the realization sales tax collections this month were up $54,853.88 (9.1 percent) over what they were for the same month last year. However, the city must also deal with the realization that this number is $36,668.59 (5.2 percent) below what the city’s current budget projected it to receive.

Having said that, there’s no reason to panic.

Yet.

But it does raise a concern because last year the city finished its fiscal year with more than a quarter million dollars — $281,897.11, to be exact — less in sales tax revenues than that budget forecast and yet, at this same juncture last year, the city was $122,371.19 above projections versus the $29,640.40 hole it finds itself in this year. That means the city, during the course of the preceding fiscal year, nosedived $404,268.30 in sales tax revenues during the final 10 months of the fiscal year.

The city is looking to hire, among other positions, some street technicians and I would guestimate that someone working in that position for the city of Kyle is going to make close to $26,000 a year and, when all the benefits, such as health insurance, pension contributions and the like, are factored into the equation, this deficit means the city, for example, might have to add one less street technician to its payroll than it originally planned. That, of course, also means one less person to work on the much-needed and wanted construction and maintenance services on our streets, alleys and sidewalks.

I’m not saying that’s going to happen, so don’t start lamenting our city is going to fall into mass disrepair. I’m just using that as an example of how this deficit for November might be addressed.

But what is going to happen if these gaps continue? Not hiring that street technician only makes up for most of this month’s deficit. But what is the city going to do if this trend not only continues, but if, in a repeat of what happened last year, the monthly gaps become considerably larger?

Which brings me to my real point here which is the public doesn’t know exactly what is going to happen. We don’t know precisely how the city plans to deal with having less money to meet its needs than it originally planned for. A budget is, because the moneys that pay for the expenditures outlined in it come from the public, is essentially a contract between its citizens and the city. The city has agreed to perform all these services for us in return for all this money we are giving them. Therefore, the city owes us a revelation of what areas will not be addressed due to budget shortfalls.

It doesn’t have to come now. But, to give you just one example, City Engineer Leon Barba stands before the city council at least once a month to present an update on the progress of the road bond projects. Once a month he does this. All I’m recommending is that once a quarter City Manager Scott Sellers or Finance Director Perwez Moheet stand before the council and publicly announce what adjustments they are planning to make in the city’s spending to compensate for the budget gap.

Because we, the public, entered into this contract with the city in good faith, we should, as a matter of course, be given periodic updates on its side of this contract. The city certainly expects us to pay our property taxes, our sales taxes and all the other fees that comprise the city’s income. In fact, there are legal penalties involved if we don’t. By the same token, we should be kept informed on how the city is fulfilling its side of the bargain.

Sales tax receipts: Both good, bad news

First the good news about the city’s sales tax receipts for the first month of this new fiscal year: They were above projections giving the General Fund a surplus of $7,028.19 as the city kick starts FY 2016-17. Not only that, they exceeded last year’s October receipts by a comfortable $67,517.31

Now the bad news: In that first month of the last fiscal year, which turned out to be somewhat of a disastrous one in terms of sales tax receipts-against-forecasts, the receipts were a comfortable 15.92 percent above what was forecast, even though those forecasts turned out to be on the, shall we say, optimistic side. This year’s October receipts, on the other hand, are only 1.45 percent above what our municipal financial gurus expected the city to collect.

In other words, to date this year, the city is $7,028.19 in the black while this time last year it was $67,517.31 on the plus side but finished the year more than a quarter of a million dollars — $281,897.11, to be exact — in the red.

So although this October’s numbers are reason to be pleased, they are in no way something to crow about. And, it must be admitted, as last year proved so dramatically, one month does not a year make. But, in the deep, dark recesses of my gut, I don’t feel all that good about this.

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.