Even as Sales Tax Receipts to City Slow, Mayor Demands No New Taxes

SAN ANGELO, TX — “I’m not in favor of raising City taxes, period,” said Mayor Brenda Gunter. Her emphatic statement comes on the heels of the latest sale tax revenue report that the mayor said showed a slowing economic growth trend as measured by sales tax receipts to the City of San Angelo’s general revenue fund.

Sales tax revenue to the City supplements revenue collected from property taxes. A good year of sales tax revenue reduces pressure to enact property tax hikes.

City Finance Director Tina Dierschke briefed the San Angelo City Council this morning and data showed sales tax receipts growth for August, as reported to the City by the State Comptroller, was in the single digits, at just a 5.74 percent increase when compared to August of last year.

In an exclusive interview with LIVE!, Gunter warned this is the second month in a row of low single-digit sales tax revenue growth and it may be warning of an overall economic slowdown. She noted that cities in the Permian Basin, like Midland, at times saw their monthly year-over-year sales tax intake increase 40-50 percent. No more. Midland was up just 6.05 percent in August vs. August last year, Gunter stressed.

“We are impacted by what happens in the Permian Basin, and I think we are seeing producers there creating operations efficiencies where the number of workers is lower in the oil field than it was one or two years ago,” Gunter said.

Industry experts agree with the assessment, though some add that while now not all the workers housed in man camps west of here are working on an oil well directly, many have found opportunities to work on the numerous pipeline projects being built through the region. This has cushioned the impact here of what Gunter called the Permian consolidation.

Still, Gunter is cautious. “We’re on the edge of the Permian, so the impact wont be as severe as in Odessa or Midland. But it will filter down to us,” she said.

Gunter also pointed out the San Angelo economy remains more diverse than the Midland/Odessa DMA. In particular, Gunter said the new high-rise hospital built by Shannon Medical Center contributed greatly to San Angelo’s economic health.

“That expansion brought more good jobs, like doctors and nurses to the city,” she said. “And we’re sitting at 2.7 percent unemployment.”

When compared to Permian cities, San Angelo also has high number of public sector jobs that are resilient in economic slowdowns, like jobs at Goodfellow Air Force Base and Angelo State University.

Since October 2018, sales tax collections are up $1,311,804 over the amount budgeted in the City’s FY 2019 budget. Gunter, who in the past advocated for more aggressive (or higher) expectations of sales tax revenue growth so the City could spend more during the year, said she is thinking the City should take a more conservative approach as the City heads into its FY 2020 budget meetings starting next week.

“We have the slowing trend line and next year is a presidential election year,” she said. She said the national election will likely slow purchasing and the sales tax revenue that comes with it for the City’s FY 2020 budget.

With less sales tax revenue growth expected, Gunter said City salaries and wage increases might be flatter than City workers desire.

“We were elected by 100,000 people to represent each citizen. If our average citizen isn’t seeing big increases in their wages, why should government workers see big salary increases?” Gunter asked.

“Unless your job is attached to oil and gas, you have not seen a big increase in household income and we have to be cognizant of that,” she said about setting the payroll portion of the City’s FY 2020 budget and the City’s overall property tax rate.

At the same time, Gunter recognizes that most of the City’s budget addresses public safety — the police and fire departments. While the County is increasing taxes while blaming the increased costs of the Tom Green County criminal justice system, Gunter said the City already made public safety investments during her previous two budget cycles.

“We added 10 new police officers in the FY 2019 budget,” she said. “Adding 10 more officers certainly has had an impact on our ability to keep lid on crime. And we added more staff to the fire department and that has had a positive impact.”

Property taxes have two prongs of impact on voters. The first prong is the actual rate. The City of San Angelo currently taxes all property within the city limits at .776 cents per $100 in valuation. The other prong is the value the Tom Green County Appraisal District assesses taxable property to be worth. An increase in either impacts how much more in real dollars property owners pay in property taxes each year.

The County estimates the total value of property inside Tom Green County, called “Assessed Property Value,” is $7,095,347,709. That is up over $1 billion since 2016 that had all taxable countywide property valued at $5,928,607,250.

Property values inside the city limits total $5,270,883,105, according to the appraisal district. City Budget Manager Kimberly Holle told council this morning that the City can expect to collect 3.58 percent, or $1,365,635, more in property tax revenue over last year because of increased property values. Of that, Holle said, $405,140 of property tax revenue increase is due to the value of brand new property added to the Assessed Property Value inside the city limits.

Gunter said her strategy has been to increase the number of commercial and industrial companies here by attracting industry. “Property tax revenue from business can provide relief to the residential property owners,” she said.

The mayor’s conservative approach for this budget cycle may be setting the stage for her next move for the FY 2021 budget meetings that begin a year from now, just in front of the May 2021 mayoral elections.

“I look forward to looking at reducing the City’s property tax rate next year,” Gunter said.