City’s Sales Taxes Drift Lower after Super Bowl

     The Texas Comptroller reported today that the City’s sales tax receipts for June (based on April sales) were down by slightly over 2%.  After eighteen months of consecutive year-over-year declines, the City saw an increase in its sales taxes in March and April, reflecting January and February sales, which were boosted by the Super Bowl.  Sales taxes for those months increased by 6% from last year, about a $5.5 million pick-up. In May the City showed a slight decrease before posting this month’s 2% decline.
      In the last two years, Houston has posted year-over-year declines 20 times. For the FY2016-2017, sales tax collections were down by 2.5% from last year and the calendar year-to-date collections so far this year are down by 5%, even with the one-time shot in the arm from the Super Bowl.
     On the bright side, it does appear that the precipitous decline that began in late 2012 has flattened out. Of course, where we go from here will largely be dependent on oil prices.
     The sales tax receipts for Houston’s neighboring cities were mixed. Most saw increases, but several saw significant decreases. Generally, the suburban cities on the east side of Houston have held up better, probably because their economies are more closely tied to the oil and gas downstream, which continues to do well.  Also, the suburban cities that are farther from Houston have generally done better.
     The budget just adopted by City Council for FY2017-2018 projects a 1% increase sales taxes for next year. That may be achievable if oil prices recover. If not, it is probably overly optimistic.