The City’s sales tax collections for 2019 grew by almost 3% compared to the previous year. [i] That was better than what the City has been projecting for budget purposes. As result the City had $20 million more in sales taxes to spend compared to 2018 and about $13 million more than the City forecasted. That is not a big number compared to the City’s overall $5.1 billion budget or even its $2.5 billion general fund budget, but every bit helps.
Sales tax collections during the year had been about on forecast until the fourth quarter. But collections in the fourth quarter, driven to a large extent by holiday shopping, jumped a sharp 6% from 2018. That increase probably had something to do with the rebound in oil prices in the fourth quarter. Oil bottomed out at $51 per barrel in August before rebounding to over $60 by the end of the year. The 3% increase for the year is consistent with the gradually slowing growth of Houston’s sales tax collections over the last decade.
The push to become less reliant on fossil fuels and the City’s tepid population growth make it increasingly likely that this trendline will probably be in place for some time. And that will be a challenge given the City’s decrepit infrastructure and legacy pension liabilities. All the more reason the City should be laser-focused on critical municipal services, such as public safety and garbage disposal, and shoring up its infrastructure, especially flood control. Anything else is a luxury the City cannot afford.
[i] The State reports local entities’ share of sales taxes receipts two months in arrears. Therefore, to calculate the sales tax collections for any particular calendar year, the reports from March to the following February must be totaled. Sales tax collections for any local entity in the State can be found at https://mycpa.cpa.state.tx.us/allocation/AllocHist.
