NORMAN — It’s a good news, bad news scenario. Good news? The city finished last year stronger than anticipated. The bad news? Sales tax revenue is down.
The city of Norman’s General Fund closed the 2012 fiscal year with a higher fund balance — $6,349,460 — than was anticipated when the new FY 2013 budget was adopted.
That money has been carried forward into this year and is available for appropriation at the city council’s discretion.
“We did start the year off better than we thought we would,” Norman Finance Manager Anthony Francisco said.
But while most of the city’s major revenue streams are on target to meet budget projections, sales tax revenue has been revised downward based on the mid-year review by the city finance staff.
“The first thing we looked at was sales tax, and as we’ve reported, our sales tax has been tracking a little low,” Francisco said.
That drop equals a 2.8 percent decrease, Francisco said, and represents a $1 million-plus difference in the estimated sales tax projected to be received into the city’s General Fund for the current fiscal year, which started July 1 and runs through June 30.
To date as of Dec. 31, the city has collected $18,193,765 in sales tax revenue. While that number represents a 2.4 percent increase from the same period last year, Francisco and his team had predicted about a 4 percent growth.
Use tax — sales tax applied to purchases made outside the city for uses within the city — is up slightly but tracking close to budget projections, Francisco said. Revenue sources that are running above budget projections include franchise taxes and fees with $3,496,586 collected so far this fiscal year; licenses and permits with $472,890 collected; other taxes with $1,063,508 collected; and fines and forfeitures with $1,203,360.
Investment income was down nearly 82 percent from budget predictions and nearly 73 percent from the same time period last year with only $9,377 collected. Last year at this mid-point, investments had earned $34,626.
Sales tax from the holiday season has not been received yet, and those numbers — along with continued tax receipts from the remaining six months of the year — could boost those numbers.
In the meantime, the city is making adjustments to a more conservative outcome to assist city spending plans. The total budgeted target for sales tax was $38,017,161, but that has been adjusted to $36,956,535.
The city has continued to grow, particularly in the University North Park district, and sales tax projections for the UNP have been exceeded. But the UNP is a Tax Increment Funding district, meaning the lion’s share of new development in that TIF is channeled to pay for streets, the park and other infrastructure solely within the UNP TIF district.
So, while those new businesses along 24th Avenue Northwest starting at Robinson Street and growing toward the north are contributing gains in sales tax, the city only receives 40 percent of those proceeds, with 60 percent going into the TIF fund.
Francisco said sales tax collections in the TIF district are 15.63 percent above budget projections.
Members of the city council expressed concerns about cannibalization at Thursday’s finance meeting but did not discuss it in detail.