All three cities are reviewing early reports that show declines in sales tax revenue projected for fiscal year 2019-20. While they have to grapple with that immediate shortfall, they are also ramping up budgetary planning for fiscal year 2020-21.
Preliminary property appraisal numbers show increases in all three cities, but final values will be released in the coming months. Grapevine saw a 4.71% increase from 2019-20 appraisal values, while Colleyville and Southlake respectively saw increases of 5.18% and 4.21%.
How this fiscal year ends will also help with plans for the next year.
“We still have about $330,000 [in] outstanding [property tax revenue to collect this year],” Colleyville Chief Financial officer Kyle Lester said at a May 19 City Council meeting. “There are a lot of unknowns. Thankfully, we are marching into those unknowns with a high degree of flexibility in this city.”
See some of the economic considerations in the wake of the COVID-19 pandemic from all three cities inside.
Grapevine saw a 24.38% decline in its sales tax revenue allocation for May as compared with that of the same month a year ago. The May allocation generally reflects sales in March, and Grapevine’s was the steepest drop among the three cities.
But Grapevine Chief Financial Officer Greg Jordan said audit adjustments made by the Texas Comptroller’s Office make the year-over-year sales tax collections appear to skew lower.
“If we make accommodations for those [adjustments] to provide a more accurate picture for the month of March, we would see a reduction within the range of 14-17%,” he said.
The June allocation from the state, which will include April sales figures, will offer an even better idea of the impact of the coronavirus.
Meanwhile, the Grapevine Convention and Visitor Bureau has also begun searching for ways to stimulate economic activity in the city.
The city announced May 19 the bureau had canceled this year’s weekly Friday Fireworks program over Lake Grapevine. This move is expected to help the bureau to boost the city’s rebound efforts from the COVID-19 pandemic by diverting funds from the fireworks program to promote hotel leisure packages, attractions, restaurants and retail, according to the city.
Other means of boosting Grapevine’s budget include funds from a federal aid package approved May 19 by City Council.
Jordan points to the CARES Act funding as being a relief for expenses incurred during the COVID-19 pandemic.
“One of the first things to highlight is the fact that we got $2.8 million from the county,” he said. “That’s a very sizable amount of money that will help us through this.”
He said delaying spending has allowed the city to continue serving its residents at the same level during the pandemic.
But those funds are restricted in what they can be used for, he said.
“We also will likely be audited at the end of this,” Jordan said. “The dollars are highly restricted. ... It can be the administrative cost for our daily briefings. It could be hardware and software costs that we have incurred for telecommuting.”
Colleyville only saw a 1.2% drop year over year in its sales tax allocation for May. Staff reported a generally positive outlook for the city’s finances.
“For the ... second month in a row, we’re posting a higher surplus than our previous cash flows would have indicated,” Lester said at a May 19 meeting.
The fact that its budget does not rely heavily on sales tax collections has meant that Colleyville has fared better than other nearby cities, Lester said.
“March is the first month that we’ve seen the economic implications from [COVID-19],” Lester said. “Just like everyone, we did take a hit. Unlike a few of our neighbors, that hit was very, very minimal.”
The city of Colleyville has taken strides to provide financial assistance to its businesses, as when the city announced in late March that it would mail out $35 gift cards to residents to use at Colleyville businesses.
Residents who took advantage of the city’s gift card program collectively redeemed more than $425,000 throughout the duration of the program.
Council Member Tammy Nakamura said at a May 19 meeting that the city anticipates federal dollars will soon be distributed to Colleyville that could replenish most of the city funds used for the cards.
The city of Southlake is reporting that two of its key revenue streams have taken a hit during the pandemic: sales tax and hotel occupancy tax revenue.
“The March sales tax collection ... is the first sales tax collection that we received to start seeing the impact as it relates to COVID-19,” Southlake Chief Financial Officer Sharen Jackson said at a May 19 City Council meeting.
Year over year, sales tax collections were down by 12%, according to comptroller data.
Jackson said Southlake was in step with the state with regard to how the local hotel industry was affected.
“Of course, the hotel industry has been one of the largest that has been impacted,” Jackson said. “Our [hotel tax] collection was 62% less than what we had anticipated for that month.”
Those hotel tax collections fund the city’s economic development and tourism efforts.
City Manager Shana Yelverton affirmed her optimism for Southlake’s financial future based on decisions made early in the pandemic, including travel freezes and the furloughs of 150 city employees in April.
“Early on, we made decisions to address any potential for decreased revenue so we could continue to make sure Southlake is a great place to live and work,” Yelverton said in a news release.