Rain gets blame in tax losses

James Coburn
The Edmond Sun

EDMOND March 25, 2008 01:02 pm

— Last year’s cooler weather and record rainfall may have played a key factor in sales tax revenue losses for the City of Edmond. Reasons for the City of Edmond’s budget woes for the 2008-09 budget due to city sales tax shortfalls were discussed at the Edmond City Council’s Monday afternoon workshop.
The city’s sales tax revenues have increased 4.3 percent since a year ago, but the city’s current budget was based on a projected 7 percent increase for a five-year financial plan.
May and June of 2007 brought record amounts of rainfall to the Edmond area and it also is when sales tax revenue began to drop, said Ross VanderHamm, director of financial services for the City of Edmond.
Sales tax revenue from stone and concrete showed a 12 percent decrease from 2006 to 2007, he said.
City Councilman David Miller said weather likely played a part in the slowdown of the housing industry and for retail last year.
“The big one we really did get hit on early in the year was ... electric and natural gas,” VanderHamm said. “Because it was cool, and we didn’t have a hot summer, electric sales were not as high as they had been previously. So we lost revenue on a regular basis from sales from electric and natural gas. The total for this year has been a $109,000 loss. And that’s sales tax loss.”
Business services posted the most serious decline in sales tax revenue with a loss of 17 percent. Furniture and furnishing sales was the area with the highest increase in sales at 10.92 percent growth.
City Manager Larry Stevens said it’s important to note that the 4.3 percent sales tax gain still is a healthy increase from the year before.
The 7 percent budget increase was thought to be a conservative one at the time. The city was enjoying a sales tax revenue increase of 9 percent when the budget was approved last year.
Two weeks ago, the city manager’s office notified each city department that it is unlikely that the funding will be at a 5 percent level by the end of the current fiscal year. Next year’s budget likely will reflect a 4.25 increase in sales tax revenues.
“I think it’s important to emphasize that the city is not in a budget crisis in any way, shape or form,” Stevens said.
The City of Edmond will have a projected $1.7 million shortfall in its sales tax budget of $42.6 million, VanderHamm said. Years 2009-13 currently is budgeted with a 5 percent sales tax increase.
“Hopefully, we’ll follow the trend of the last three years and see some increase in the last two months of the (fiscal) year,” VanderHamm said.
Stevens said it’s the city’s goal to have the complete proposed 2008-09 budget available by May 1.

jcoburn@edmondsun.com | 341-2121, ext. 114