Saturday, August 05, 2017

City Council to Hear about Economic Development Funding on 8-8-17

Economic development was the major theme at City Council's strategic planning session on 7-27-17.  The City's Development Corporation conducts economic development for San Angelo.  It is funded by a voter approved, half cent sales tax.

Sales tax proceeds rose significantly during our oil boom 2014-2015 and fell afterwards.  City staff present regularly to Council and the Development Corporation on sales tax proceeds, as it is an important funding source for both entities. 

City Council will hear a budget presentation on  August 8th.  The presentation highlights major departments including the Development Corporation. 

The Development Corporation is primarily funded through the type B sales tax, 72% of which is earmarked for ballot projects and 28% of which is allocated for economic development initiatives. Staff proposed sales tax at a large decrease which subsequently decreased both the ballot and economic development expenses in order to balance.
A slide shows budgeted sales tax revenues for the current year of $9 million.  I couldn't find this number anywhere in city documents.

It's not in the proposed COSADC budget. Nor is it in the City's most recent monthly financial report, which indicates both an original and current budget.  Staff already revised sales tax proceeds down nearly $800,000 for the current fiscal year.

Staff will present the new $9 million number to City Council, which includes a former Development Corporation board member who approved last year's budget of $8.85 million.

The current fiscal year has two one-time gains, $1.1 million from the Hirschfeld-Martifer settlement and $1.6 million from asset sale gains.  These two items won't reoccur.  However, MedHab's economic development package with the city, originally estimated at $3.6 million, could expire in 2018.  Add back the city's planned support for OneEnergy's Mesquite Solar farm and more economic development funds could be freed up.

As of June 30 the Development Corporation had $14.5 million in cash and investments on its balance sheet.  These funds could cushion the projected sales tax decline from the current budget of $240,000.

Also, the last six months show signs that sales tax revenues could be stabilizing.  There might not be a shortfall at all.

Budgets tell stories about the present and the future.  I look forward to hearing the story of the $9 million and its precipitous fall of $1.15 million.  It might be a barn-burner..

Update 8-20-17:  The latest sales tax figures for COSADC show this revenue source is back on track.  Sales tax proceeds increased 13.5% from last July, putting the development corporation just over budget with two months left in the fiscal year. 

Update 8-22-17:   The $9 million sales tax projection came from April 2016.  City staff did not say why budget staff went so far back to fish out a number that has since been revised twice. 

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