14.2 % drop in sales tax revenue

[RecycleMichael]

http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20091110_11_A1_Tulsas648967

Sales tax revenue drops 14.2 percent
The unprecedented downward spiral started in April, an official says.

By BRIAN BARBER World Staff Writer
Published: 11/10/2009  

Tulsa's sales tax revenue for November is continuing in a downward spiral, dropping 14.2 percent from the same month last year. But whether that will prompt budget cuts beyond the $6 million already planned remains to be seen, officials said Monday.

City leaders just received the monthly check from the Oklahoma Tax Commission that was $15,145,911, compared with $17,649,588 in November 2008 — a roughly $2.5 million plunge. The revenue was collected from Sept. 16 to Oct. 15.

"What we are seeing is unprecedented," city Finance Director Mike Kier said, noting that Tulsa has posted declining sales tax numbers since April.  "These have been the worst eight months of revenue decline the city of Tulsa has seen in the more than 30 years we have been tracking this data." Tulsa's City Council will be presented with a budget amendment in Tuesday's committee meetings that will take the fiscal year's spending plan from $567 million to $561 million. Among the cuts that will accomplish that reduction are 37 jobs, including 21 police officers, th e police helicopter and mounted patrol units and the police and fire academies, among other items. Eighteen of the officers have been rehired for the police force using federal stimulus funds. However, the revised forecast numbers are already not holding up. November's sales tax revenue was projected to hit $16,131,000 —nearly $1 million more than was actually generated.

Kier said it's too early to speculate on what caused the shortfall. The tax commission will release its detailed report later this month. "Well, it confirms the need for the $6 million in cuts," he said. "Whether we have to go further, we'll just have to wait and see." With the holiday shopping season coming up, Kier said, the city could possibly make up some ground. "We hope that people go out and spend," he said. "Spend locally," Kier added.

Mayor Kathy Taylor said she and her administration will continue to identify other sources of revenue and areas to cut spending, pledging to work on a smooth transition with the new mayor, who will take office Dec. 7. In an e-mail distributed late Monday, Taylor encouraged city residents to vote in Tuesday's general election, saying it is important to elect someone who will work to diversify city revenue sources. "We will continue on this roller coaster unless we elect someone tomorrow with the political will to take a hard look at our city's revenue base," she said.

"If you care about public safety and the growth of our city, you will vote for a mayor who will have the political backbone to look at the revenue side of the equation."

Kier said he and his finance staff are ready to get whoever is elected up to speed quickly.

"In my mind, it's the top issue facing the city," he said.

[RecycleMichael]

Message to the new Mayor and new Council:

Good luck. I agree with the finance guy. This is the most pressing issue facing the city today.

[Wrinkle]

The emphasis on Sales Tax (and the agenda for new revenue sources, police/fire district tax) is being inflated.

Sure, it's down from last year, same month. And, represents a shortfall in planning, or at least the criteria used to project.

But, Sales Tax collections represent less than 1/3rd, closer to 1/4 of the City's budgeted revenues.

Here's what I recommend.
Our new Mayor implements a 10-year, $650 million bond issue. That's right, a tax. Hopefully, one which replaces an expiring tax, like when Vision 2025 ends, or such, so that it becomes a no-change tax.

In these slow economic times, we could achieve very favorable Bond rates approaching 3%-4% and then deposit the $650M in a money-market account, drawing around 1.5%-2.5% interest. That makes the effective rate on the Bonds between 0.5% and 2.5%, slightly higher as the drawdown occurs.

These funds would be used to fund the current years' city budget, parsed out in prorated monthly installments to match last years' budget ratio. Meanwhile, all Sales Tax and other City revenue is deposited into an escrow account for the entire current year. Whatever amount is collected this year becomes next years' budget, with interest collected over the year deposited into a reserve fund. And, next years' budget is allocated directly in relation to whatever funds are received in the same month from last year.

There, no budget problems ever again. All departments would know a full year in advance exactly how much money they can spend a year from now. If they can't make necessary adjustments in that time, they get fired.

[TulsaSooner]

Please show me a money market that is yielding anything close to 1.5-2.5%.  The City cannot invest in just any money market, by the way....they do have an investment policy that dictates in what they can and cannot invest.

[Wrinkle]

Please show me a money market that is yielding anything close to 1.5-2.5%.  The City cannot invest in just any money market, by the way....they do have an investment policy that dictates in what they can and cannot invest.

I was guessing. But, whatever current MM rates are would effectively discount the Bond rate. Sure, it would have to be a secured investment, not speculation.

[cannon_fodder]

I would very much like to see tax revenue by year graphed out.  I understand we are down for the year significantly in sales tax (as much as 10% of sales tax), but our other revenues (75% of budget?) should be fairly stable or even rising.  A bar graph of total revenue by year with sources broken out in different colors in the bar would help me understand the current crisis.

I'm willing to guess our funding levels are at or near what they were not-to-long ago but we are spending significantly MORE money.

The new mayor will have a test of fortitude in a mighty big hurry.  The one thing I know from the signage is if Bartlett wins, the cuts won't be coming from the fire department . . .

[TulsaSooner]

I was guessing. But, whatever current MM rates are would effectively discount the Bond rate. Sure, it would have to be a secured investment, not speculation.

Most of the Treasury-backed MM's that I've seen are yielding, literally, 0%.

[TulsaSooner]

I would very much like to see tax revenue by year graphed out.  I understand we are down for the year significantly in sales tax (as much as 10% of sales tax), but our other revenues (75% of budget?) should be fairly stable or even rising.  A bar graph of total revenue by year with sources broken out in different colors in the bar would help me understand the current crisis.

I'm willing to guess our funding levels are at or near what they were not-to-long ago but we are spending significantly MORE money.

The new mayor will have a test of fortitude in a mighty big hurry.  The one thing I know from the signage is if Bartlett wins, the cuts won't be coming from the fire department . . .

I think there are a number of financial reports available on the City's website where you could find this if you were so inclined.

[FOTD]

Here's what I recommend.
Our new Mayor implements a 10-year, $650 million bond issue. That's right, a tax. Hopefully, one which replaces an expiring tax, like when Vision 2025 ends, or such, so that it becomes a no-change tax.

In these slow economic times, we could achieve very favorable Bond rates approaching 3%-4% and then deposit the $650M in a money-market account, drawing around 1.5%-2.5% interest. That makes the effective rate on the Bonds between 0.5% and 2.5%, slightly higher as the drawdown occurs.

These funds would be used to fund the current years' city budget, parsed out in prorated monthly installments to match last years' budget ratio. Meanwhile, all Sales Tax and other City revenue is deposited into an escrow account for the entire current year. Whatever amount is collected this year becomes next years' budget, with interest collected over the year deposited into a reserve fund. And, next years' budget is allocated directly in relation to whatever funds are received in the same month from last year.

This looks like conversion, Wrinky. Raising taxes? What are you a liberal?

FOTD prefers a progressive tax....excluding groceries and medicine.

If you didn't see this coming, you are a good republican.

[Vision 2025]

I think this is what they used to call "California Bonds."

[AVERAGE JOE]

The emphasis on Sales Tax (and the agenda for new revenue sources, police/fire district tax) is being inflated.

Sure, it's down from last year, same month. And, represents a shortfall in planning, or at least the criteria used to project.

But, Sales Tax collections represent less than 1/3rd, closer to 1/4 of the City's budgeted revenues.

That's false. According to the Oklahoma Municipal League, in 2006 cities in Oklahoma received 49% of their revenue from sales taxes. The average U.S. city received 11% of its revenue from sales taxes that year.

[bokworker]

Please show me a money market that is yielding anything close to 1.5-2.5%.  The City cannot invest in just any money market, by the way....they do have an investment policy that dictates in what they can and cannot invest.

Hmmmm ,let's see, pay 3 to 4% for money and then deposit it in accounts earning 0-1%... where I come from we call that an "aggie arbitrage"... I guess you make it up in volume.

And yes, I went to school at OSU.

[rwarn17588]

Hmmmm ,let's see, pay 3 to 4% for money and then deposit it in accounts earning 0-1%... where I come from we call that an "aggie arbitrage"... I guess you make it up in volume.

And yes, I went to school at OSU.

First, Wrinkle is miles off course on average money-market rates.

Then he's wrong on what the money can be invested in.

Then he gets the sales-tax revenue proportions wrong.

Note to self: Don't let Wrinkle ever be my money manager.

[shadows]

Tulsa is only a peep in the sounding of a long note in the parade as for the lack of encouraging business they have created programs that discourage business growth, driving them to suburbs or to even off shore ventures.  

A police/fire district increases the uncontrollable home owner  taxes.  The land grabs by the city of cow pastures only increased the public safety ratio to population.  The secondary rule of the authorities/trust continue to bleed the citizens of the necessities they need.  

The failure of the city leaders to recognize the actual rate of unemployment contribute to an influx of out of state job seekers which will increase unemployment. The increase in the demand on charitable organization should be an alarm that such increases crime.  The budget should remain stable for the next three years in order for the bubble to regain its strength.  Tulsa should do like the citizens are required to do.  Tulsa should live within their income or reduce the cost to where they can.

All roads do not lead to Rome nor Tulsa any more.  

[Wrinkle]

First, Wrinkle is miles off course on average money-market rates.

Then he's wrong on what the money can be invested in.

Then he gets the sales-tax revenue proportions wrong.

Note to self: Don't let Wrinkle ever be my money manager.

I'd be pleased if you just ignored me. (that is, just you).

But, MM rates are all but irrelevant to the discussion, but appears you missed that. If they'd have been important, I'd have look up a semi-current rate. It wasn't, and wasn't close to miles off either.

Whatever it is, it was used as a means to discount the bond rate when/if possible. IOW, reduce costs. If you wish to package it up and issue new bonds every month, go for it. But, I doubt you're going to save any money in doing so. Probably cost more given the $10 million cost on every issue done here.

Where was I wrong about what it could be invested in, I stated a secure investment, not speculative. You missed that too I guess.

I did not get the sales tax proportion wrong. You've latched onto an incorrect source above who's information is inaccurate as it relates to this City (we were talking of Tulsa, right?). In Tulsa, we had $214 million in Sales Tax revenue last year and a $658 million operating budget.
It only takes middle school level math to get 32.5% contributed by Sales Tax.

So, hafta ask, did you comprehend the concept at all, or even bother to read it?