Sales tax collections, the economy, and the vision thing

This fall, Mayor Park Cities gave a speech in which he outlined his vision for Dallas:

“But if we’re not willing to invest in the city, then in essence, we’re throwing up the white flag. The greatest risk is that we don’t move forward, that we don’t invest, that we accept mediocrity."

No one, not even the mayor’s harshest critics, will argue that Dallas needs to stand still. We do need to invest in the city. We do need to make this a better place to live. I don’t even know that the issue is over what the mayor wants to invest in – big-deal projects like the $2 billion Trinity River effort and the $500 million convention center hotel — or the smaller, day-to-day things the rest of us want — fixing pot holes, upgrading city services and cutting crime. Reasonable people can disagree.

The disagreement is over leadership, because that’s where Leppert is failing. He is fiddling, promoting his projects, while the city budget burns. In October, the first month of the city’s fiscal year, sales tax collections were 13 1/2 percent below projections. The mayor should not be spending his time strong-arming the council to get the hotel funded before next spring’s referendum. He should be working to avoid the big-time budget cuts that are coming in February if the sales tax numbers continue to decline this dramatically.
We’ve put together a handy chart so you can follow the sales tax figures, including what the budget says we need to collect, a blank to insert what we collect each month this year, and what we collected last year. I’ll update it every month, and you can see for yourself whether it’s time to worry.  Because, frankly, I think it is.

The sales tax accounts for about 21 1/2 percent of the city budget. The other major component is the property tax, which I think accounts for about half of revenue. That’s because deciphering the property tax numbers is much more complicated, but I’m working on it.

So why do we need to worry? Because the sales tax numbers have missed budget projections for the last three months – by less than 1 percent in August and 1.4 percent in September to close out the last fiscal year, and by a whopping 13.5 percent in October. The October tax collection was the smallest in some two years, based on figures from the state comptroller. (You can see historical sales tax figures on the comptroller site, but there’s a two-month lag between what the city gets and when it’s posted. That means that the figure you see in February 2008 was actually the number for December 2007.)

This year’s budget, wrote city manager Mary Suhm in August, was predicated on continued “economic development and growth, especially in expanded downtown neighborhoods and Southern Dallas business parks. Commercial growth and new construction continue to drive the increasing value of the City’s tax base.  … Add to that a considerable drop in the unemployment rate which has fallen from 8.2 percent in 2004 to a current level of 5.2 percent and it is clear that the City’s financial footing has been much firmer than many municipalities across the country.”

I think we can assume those assumptions are no longer relevant. Yes, it doesn’t look like it’s going to be as bad here as it already is elsewhere, but we’re not going to escape unscathed, either.  The drop in sales tax collections isn’t the only sign. The unemployment rate in the Dallas metro area was 5.5 percent in October, up from 4.0 percent in October 2007. Meanwhile, the number of people receiving food stamps in Dallas County increased from 207,381 in December 2007 to 271,496 in December 2008, according to the Texas Health and Human Services Commission.

Which is why the mayor needs to focus on the budget and the economy.  Because the last thing we need is to spend $500 million – plus interest — on the hotel in January while the budget gets whacked in February.


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