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City Sales Tax Slide Continues
The City of Houston got more bad news this week when the Texas Comptroller announced the City’s sales tax receipts for August were down again. For the second month in this fiscal year (2016-17) the receipts were down by 4.5% compared to last August. The sales tax for the first two months of the new fiscal year are the lowest since 2013.
The hope that the slide in sales tax collection was leveling off is now waning as we are beginning to see two years of year-over-year declines. Also it is becoming increasingly doubtful that City’s budget projecting a 3% decline for this year will be sufficient.
This is a chart of the City’s sales tax collections for the last two years:
It is noteworthy that the trend line, which had previously suggested that sales taxes bottomed out late last year, has turned negative based on the last two months’ data.
It is tempting to attribute the decline in sales taxes to the slump in the energy sector. But the fact that most of the cities in Houston’s suburbs saw considerably better sales tax receipts brings that explanation into question. Here are the year-over-year results for some of the suburban cities.
This trend of the suburbs outperforming the City’s sales tax collections is likely the result of numerous factors, but it certainly appears that the exodus of companies out of the City is beginning to take a toll.