The city’s estimated year-end sales tax revenue for fiscal year 2019-20 is not significantly lower than budgeted. The bigger impact, officials said, will be in FY 2020-21, when the city could see a loss of $1.5 million.
The city budgeted $35,044,590 in sales tax for FY 2019-20 but is now estimating $34,728,084—a difference of $316,506—by year's end. The actual sales tax revenue collected in FY 2018-19 was $36,091,913.
Better-than-expected sales tax revenue for the first half of FY 2019-20 has cushioned most of the blow coronavirus could have on year-end numbers, Conroe Assistant Director of Finance Collin Boothe said at the April 23 Conroe City Council meeting.
“Where it’s really going to hurt us is we start talking about next year’s budget is looking at next year’s sales tax number,” Boothe said.
To come up with his projections, Boothe said he analyzed three different downturns since 2001 and the effects they had on the local economy and sales tax revenue: September 11, 2001; the stock market crash of 2008 and the global downturn in 2015.
By using these scenarios as baselines, Boothe said he was able to roughly predict what sales tax revenue could be for this fiscal year and the next.
“[For example], when you look at the 2008 numbers, we had about 11-12 months of double digit decreases in sales tax, and it took about three years—about 24-36 months—to recover in sales tax,” he said.
Steve Williams, Conroe assistant city administrator and chief financial officer, said officials should keep an eye on how things pan out when setting next year’s budget.
“We will know a lot more in the next couple of months,” he said.
