Clear Lake Shores approves budget, sees projected sales tax revenue drop

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The Clear Lake Shores City Council on Sept. 17 approved the fiscal year 2019-20 budget in the wake of lower-than-expected projected sales tax revenue. It will be adopted at a special meeting next week.

The $4.4 million budget, which begins Oct. 1, includes $2.64 million for operations and capital projects and about $1.8 million in a “rainy day fund,” City Administrator Brent Spier said. The FY 2018-19 budget is roughly the same at about $4.5 million.

“We’re pretty level-loaded,” Spier said.

Spier said the city is seeing about a 6% drop in its projected sales tax revenue, but staff expects it will correct itself soon. Sales tax revenue is Clear Lake Shores’ primary revenue source. Clear Lake Shores does not collect property taxes, Spier said.

“We’re in an interesting community in that we survive entirely on sales tax revenue,” he said. “We are business-driven, consumer-driven.” 

Spier said it is not unusual for there to be a drop in sales tax revenue after a storm-recovery year. Residents spent lots of money immediately after Hurricane Harvey to repair their homes but spent less the following year, he said.

Clear Lake Shores’ sales tax is 8.25%, the maximum allowed under state law. Most Bay Area communities have a sales tax of 8.25%, but regardless, residents do not drive extra distances to save 0.25% in taxes on their purchases, Spier said.

“People don’t look at sales tax rate; they buy based on convenience,” he said.

The city gave its 19 employees across-the-board raises during FY 2018-19. The FY 2019-20 budget includes about $25,000 set aside for merit-based raises, Spier said.

“We’re trying to equalize those and trying to judge people not against a menu … but individually based on their performance,” he said.

Clear Lake Shores is also seeing an uptick in building permit applications. New commercial businesses are expected, including a four-story hotel that has been in the works for a few years now, Spier said.

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Jake Magee
Jake Magee has been a print journalist for a few years, covering topics such as city government, education, business and more. Starting off at a daily newspaper in southern Wisconsin, Magee covered two small cities before being promoted to covering city government in the heart of newspaper's coverage area. He moved to Houston in mid-2018 to be an editor with Community Impact. In his free time, Magee enjoys playing video games, jamming on the drums and bass, longboarding and petting his cat.
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