City may face lower sales tax collections on top of massive budget deficits

Likely mayoral candidate and former Chronicle columnist Bill King released a short note on City of Houston sales tax collections, the City’s budget assumptions, and the City’s looming budget deficits as the area economy is facing an oil-price related slowdown:

As most of you are aware, the City is facing deficits in its general fund of hundreds of millions of dollars over the next few years. The size of those deficits vary depending on what assumptions are used. One of the most critical assumptions is sales tax growth. Sales taxes make up almost 30% of the City’s total general fund revenues and, unlike property taxes, they are not subject to any revenue caps.

In its most recent projections, the City has assumed that sales tax growth will continue to slow to something in the 4-5% range. It used projections from UH’s Institute of Regional Forecasting. However, those projections were made in September when the price of oil was still above $90. For every 1% that the City misses their projections, there will be about a $70 million increase in the deficit over the next five years.

Read the entire article here: City sales tax growth is cooling, Bill King.

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