14.2 % drop in sales tax revenue

[Wrinkle]

When you don't understand something, you throw your arms up in the air and claim it's all, "smoke and mirrors".  When I don't understand something, I try to learn.  But I'm running out of patience trying to understand you.

The City's 2008-2009 revenue projections were well over $600 million, $605 million, iirc. You can't deduct operating costs at will to arrive at your 'operations' budget, then create meaningless ratios.

I understand fine.

The total FY 09 budget is $587,385,000 – a 3.1 percent increase over the original FY 08 amount. The operating budget is $525,107,000 and the Capital Improvements budget totals $62,278,000.

http://www.cityoftulsa.org/COTlegacy/documents/0809budget/Section02ExecutiveSummary.pdf

And, as you probably know, we had $25 million surpluses last year, which were also spent.

So, in your mind, what percent of $612 million is $214 million?

[Chicken Little]

btw, Sales Tax revenues were 100% of all Sales Taxes collected last year. (though, the city pays 1.5% to the Commission for their work to collect, account and distribute it).

I think you are wrong...again.  The link you sent seems to be remittances to cities, not collections.  About $18 million a month...that's about right according to news and other fact-based sources

[Wrinkle]

I think you are wrong...again.  The link you sent seems to be remittances to cities, not collections.  About $18 million a month...that's about right according to news and other fact-based sources

Depends on how the fees are paid. If they're deducted from collections, then the city remittances would be 1.5% less. If paid as a service, like a bill, then the remittance would equal collections. Small difference, but an accouting issue.

[rwarn17588]

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.

If they weren't important, then why did you mention it so prominently?

And, yes, a yield of 1.5 to 2.5 percent that you quoted is miles from a rate of zero.

Hell, no wonder you confessed to being "anti-business" in another thread. You have no concept of basic math.

[TulsaSooner]

The City pays the Oklahoma Tax Commission 1.0% to collect and remit sales taxes.

And whoever said their MM is earning 1.5%, good for them...that's not bad these days.  But I'm guessing the City would not be allowed to invest in yours but they can invest in those backed by US Treasuries and those aren't paying anything, literally 0.

[Wrinkle]

The City pays the Oklahoma Tax Commission 1.0% to collect and remit sales taxes.

And whoever said their MM is earning 1.5%, good for them...that's not bad these days.  But I'm guessing the City would not be allowed to invest in yours but they can invest in those backed by US Treasuries and those aren't paying anything, literally 0.

So what, it doesn't matter a flip. Just a way to recapture some of the rate cost with money lying around. That is not the point of this proposal.

Besides, I'd guess (yeh, I don't know for sure) but IF this were to happen, it could be 2-10 years from now. What do you think rates will be like then?

I actually might hope rates improve to at least 1.5% in a couple of years.

Everyone seems focused on the wrong issue anyway, so I officially end this thread, at least as far as I'm concerned. Knock yourselves out.

[Chicken Little]

Depends on how the fees are paid. If they're deducted from collections, then the city remittances would be 1.5% less. If paid as a service, like a bill, then the remittance would equal collections. Small difference, but an accouting issue.

Not small.  You were claiming that $214 million was collected in Tulsa.  That's the remittance.  The state kept 4.5 pennies, so the collections in Tulsa must have been $535 million.

It's not smoke and mirrors.  1/3 of the sales tax, and the water and sewer fees are special purpose and can't be juggled around to pay for cops...which was your point.  Take it off the the table and you are left with two pennies of (volatile) sales tax to pay for cops.

If sales tax plummets, and it usually does, then where do you get the money to pay for cops?  You can't raise water rates, and you can't even use that meager property tax 'cause that's for a special purpose, too.  Point is, according to Martinson's pie chart, you start with 43% of a pie, and the vast majority of that is the two cents sales tax.  So, sales tax IS hugely important when it comes to paying cops.

When sales tax takes a dump, you don't have anywhere to run to, and you have to start looking at laying people off.  When sales tax is high, I guess they throw it into a road or something, but they shouldn't be hiring based on the fact that they exceeded their projection in a given year.  That'd be stupid.

[rwarn17588]

Everyone seems focused on the wrong issue anyway, so I officially end this thread, at least as far as I'm concerned. Knock yourselves out.

Translation: I couldn't hack my half-baked musings against the facts, so I'm talking my ball and going home.

[Wrinkle]

Not small.  You were claiming that $214 million was collected in Tulsa.  That's the remittance.  The state kept 4.5 pennies, so the collections in Tulsa must have been $535 million.

It's not smoke and mirrors.  1/3 of the sales tax, and the water and sewer fees are special purpose and can't be juggled around to pay for cops...which was your point.  Take it off the the table and you are left with two pennies of (volatile) sales tax to pay for cops.

If sales tax plummets, and it usually does, then where do you get the money to pay for cops?  You can't raise water rates, and you can't even use that meager property tax 'cause that's for a special purpose, too.  Point is, according to Martinson's pie chart, you start with 43% of a pie, and the vast majority of that is the two cents sales tax.  So, sales tax IS hugely important when it comes to paying cops.

When sales tax takes a dump, you don't have anywhere to run to, and you have to start looking at laying people off.  When sales tax is high, I guess they throw it into a road or something, but they shouldn't be hiring based on the fact that they exceeded their projection in a given year.  That'd be stupid.

I said the city recieved $214m from the Tax Commission. (remitted to the city from OTC). i.e., Tulsa 'collected' as it relates to its' 3-pennies. If you wish to get technical, businesses 'collected' the States' 4.5% and remitted it to OTC, who gave it to the State Treasurer.

That's the City's share (either before or after the Commissions' 1% take).

When you omit 1/3rd as Third Penny proceeds dedicated to Capital projects, Sales Taxes produce ($214/3)*2 = $142.67 million for the Operating Budget.

$142.67m / $525m Operating Budget = 27.28% (before the $25m surplus)

[Red Arrow]

Or, do you prefer to bury coffee cans in your back yard?

Plastic peanut butter jars, they don't rust.

[Wrinkle]

Plastic peanut butter jars, they don't rust.

You make far more sense than anyone else here.

[Chicken Little]

I said the city recieved $214m from the Tax Commission.

You may have meant "received", but you said "collected".  You were unclear, but that's history.

When you omit 1/3rd as Third Penny proceeds dedicated to Capital projects, Sales Taxes produce ($214/3)*2 = $142.67 million for the Operating Budget.

$142.67m / $525m Operating Budget = 27.28% (before the $25m surplus)

See, here's the problem.  You are willing to parse the revenue when it suits your bogus claim, but when a councilor's report claims that only 43% of the budget is discretionary, you call it "smoke and mirrors".

- (p30) "After deducting revenues earmarked for specific purposes, we are left with about 43% of the total budget to use for general operations."  That was $232 million in that year.

- (p22) "The City has relied on a 2% sales tax since 1971 to fund operations." That was, as you pointed out, about $142 million (depending on the year).

- (p5) Police and fire salaries are about $122 million a year.

You claimed,

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

And you've wasted many posts trying to argue that the mayor and city council can simply dip into the balance of that $546 million revenue stream and find ways to pay for cops and firemen.  That's simply not the case.  Most of the budget is earmarked.

And these guys' salaries are, in fact, heavily dependent on sales tax revenue.  When sales tax plummets, their jobs are in jeopardy, plain and simple.

Now, if you'd simply concede that you were wrong, we could talk sense.  First, I'm not upset that 57% of the budget is earmarked.  I WANT decisions like buying a new City Hall to be difficult.  More important, I don't want those people to start making Soloman's choices involving our water system, our sewers, or, frankly, our debts.  That kind of stability is important, but because it IS stable, you may tend not to notice.

Cops and fireman should be paid out of an equally stable revenue stream.  When they talk about creating a fire district funded by property tax revenue, I think I'd gladly trade that for a similar amount of sales tax, dollar for dollar.  Because it's stable, predictable, funding, and not subject to ups and downs of the economy.

Refer back to that Texas pie chart that shows that those cities receive roughly equal amounts of sales tax and property tax.  That's a lot more stable and probably a good model for us.

[Red Arrow]

... I think I'd gladly trade that for a similar amount of sales tax, dollar for dollar.  

It usually winds up not being a trade, just another increase.

[Chicken Little]

It usually winds up not being a trade, just another increase.

Often yes, but I don't think that's an acceptable excuse for doing nothing.

If they pooched us on a fire district, then voters would get them back on the third penny and turn that down.  Interestingly, the third penny brings in $71 million a year and fireman salaries are $51 million.  It could work out.  They'd be stuck trying to do capital projects with $20 million LESS per year to do it.

[bokworker]

I went to OSU as well and was taught better somehow. If it's used to discount the cost, then it effectively makes money. Beyond that, it's only as possible and has little to do with the concept. Go ahead, pay the full 3%-4% for it if you wish.

What school teaches you to stuff money in your mattress? Or, do you prefer to bury coffee cans in your back yard?

Wrinkle, I certainly do not want to disparage a fellow OSU grad but I fail to see why you would advocate borrowing money at a HIGHER rate than you can invest. Sure putting it in a money market account reduces the cost of borrowing but the point is it is still a COST.

Generally we should only borrow to put money to work in a manner that it yields a higher return than the cost of borrowing. If we do that then we create wealth. In the absence of generating a higher return than the cost of borrowing we destroy wealth.

In this particular example the point is not that I would recommend taking the money and burying it in a back yard. I would recommend not borrowing the money in the first place.

I wellcome your thoughts on how I am viewing this in the wrong perspective....