theadanews.com - Ada, Oklahoma

Local News

July 26, 2013

City’s sales tax numbers take a hit in May; was it part of a trend, or a fluke?

Ada —

Ada lost about $56,000 in sales tax revenue in May, but the drop should not affect the current budget, according to the city’s finance director.

The city’s deposit for July indicates that Ada collected about $1.19 million in sales tax revenue in May, the most recent month for which figures were available. Deposits are two months behind the actual sales tax collection.

Local merchants reported that their sales were down $1.4 million in May, which represents a loss of about $56,000 in sales tax revenues.

The loss in sales tax revenue shouldn’t affect the city’s current budget unless those collections fall below a certain level, finance director Donna Doolen said Tuesday.

“Because the process in place only allows the general fund to budget 90 percent of the estimated revenue to be generated in the year to come, then as long as a decrease is not extreme, the current budget should be fine,” she said in an email. “It will begin affecting the current budget when sales tax collections fall below the amount budgeted (that 90 percent). Should that occur, the city manager will have to propose a rebalanced budget.”

 

Building a budget

Sales tax revenues are the key to the city’s budget, accounting for approximately 70 percent of the general fund. The city uses that fund to cover a variety of expenses, including street maintenance, public safety and some administrative costs.

Ada reported a 2.36 percent increase in sales tax collections in fiscal year 2012-13, but collections were strongest in the last six months of 2012, Doolen said. She added that city officials have predicted that collections in 2013-14 will be about 2.5 percent higher than they were the previous year.

“Realistically, we anticipate monthly fluctuations and as long as they aren’t significant dips, then we wait to see where we are closer to mid-year,” she said. “If at that time, the actual collections to the budgeted revenue aren’t looking favorably, measures are taken by the city manager to rebalance the budget.”

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