The city of Katy will collect $978,275 in sales tax revenue in May, a 7% decrease from the $1.1 million the city collected in May 2019, according to figures released May 6 by the Texas comptroller of public accounts.
The sales tax revenue the city will collect in May is based on sales that occurred in Katy in March. Social distancing guidelines and business restrictions were put in place in mid-March.
However, Katy Finance Director Andrew Vasquez said a 7% decrease is ‘pretty darn close’ to the 2019 numbers. In fact, the city had experienced even larger year-over-year sales tax revenue drops in January, at 11.2%, and April, at 7.6%, according to comptroller data. "Sales tax revenue is through May is $8,490,378, which is 64% of the budgeted amount of $13,453,000,” Vasquez said. “At this point in the year, we are generally at 67% collection rate of our projected sales tax revenue.”
Sales tax revenues make up about 42.5% of the city of Katy's fiscal year 2019-20 budget of $31.6 million, according to a budget update document included in the April 27 Katy City Council meeting agenda packet.
Vasquez said he did not know what to expect from March sales with the late month closures of events and stores.
“I was thinking, ‘We’re going to be shut down for the reminder of the year,’” Vasquez said. “Nobody knew how long this was going to be. We were in the hunkering-down point.”
Vasquez said he expects the city of Katy will see a $2.6 million shortfall in overall sales tax revenue when FY 2019-20 ends Sept. 30. But the worst is not over yet.
“I don’t think we’ve seen the real result of the shutdown yet,” Vasquez said. “We’re going to see the beginning of all the damage in the June numbers, [which will reflect April sales]. The June numbers are going to show the result of the [Katy Mills] mall shut down, which, just that alone could be a 19% decrease, or approximately $230,000.”
Vasquez and the city administration are reducing spending, and the city will use its reserve funds to help cover any shortfalls in revenues, he said.
“We have a little bit of cushion there, but if this is ... just a temporary situation, we may come out of this OK,” he said. “But if this continues into the following year, we could be looking at some drastic measures.”
