Sales tax gains not all smiles

By Barry Porterfield

August 28, 2008 01:41 pm

— The numbers keep going up when it comes to sales tax revenues in Pauls Valley these days. On the downside, so are the overall costs.
Revenue numbers released this month, which actually apply to local business in June, followed another positive trend for PV as slightly more than $400,000 in sales tax monies were disbursed.
In fact, the local sales taxes have passed that number five times in recent month.
“The last two months it’s been up over $400,000,” Frizell said.
“In comparison to last year it’s higher. It allows us to get work done that we couldn’t have in lean tax years.”
It’s not all smiles as the city’s expenditures are also way up — in some cases offsetting or even surpassing the big gain.
“The higher revenues are offset by the higher costs of everything else,” Frizell said.
“If the revenues were at the same rate as say two years ago we would have to be concerned. We’re not because the revenues are up,” he said.
“However, even though revenues are up so are our expenditures.”
An example of how misleading the big revenue number might be comes from July when PV received a disbursement of slightly more than $400,000.
During that same month expenditures spiked way up there — more than $450,000.
Simple math shows that doesn’t add up, which Frizell said occasionally happens when the city’s costs are higher than revenues.
“Basically we were $45,000 in the red last month.”
The city manager is quick to stress that equation normally balances out over a period of time.
Good thing since the sales taxes represent the vast majority of revenues that operate PV’s municipal government, which is essentially a 3-penny local tax with a fourth penny going over the last few years to pay for Longmire Lake.
“We rely almost solely on sales tax,” Frizell said, adding other cities also have access to other sources of revenue such as ownership of their local electrical power.
As for the trend of higher sales tax revenues in recent months, Frizell attributes much of that to the opening of the local Wal-Mart Supercenter in July 2007.
He also credits the opening of a new ACE Hardware store and various construction projects.
“Wal-Mart is a large part of it but not the only part.”
A quick glance at business activity in Pauls Valley these days also appears to show a very slight rebound after gas prices surpassed the $4 mark several weeks ago.
Some of that could be due to a drop of those prices since early July, according to Lenny Brumley of Leonard’s Super Stop.
Brumley said gas prices have dropped as much as $1.60 a gallon or more over the last few weeks.
“There’s a pretty good range in how much it’s dropped,” he said.
“Prices are still high but not as high as they were. People are still not driving as much, but they have loosened up a little bit. They’re not complaining as much as they were.
“Business is a little bit better than when it was at $4.15 but not by a whole lot.”