Lubbock is two months into a hiring freeze because of weak sales tax collections which are not expected to improve soon – so the city is planning other ways to save close to $5 million between now and the end of the fiscal year, Sept. 30.
“Statewide it’s just still a little bit weird,” said City Manager Jarrett Atkinson said during a City Council meeting Tuesday where he listed ways to save money.
Atkinson displayed a chart of sales tax collections in the largest Texas cities. (Revenue runs a month or more behind consumer activity.) The cities were way above average in December and March. But January and April were way down, creating a chart with sharp peaks and low valleys.
“This is a trend throughout the state and from something I read the other day it’s a trend throughout the whole United States,” Atkinson said.
According to Reuters: “U.S. consumer spending unexpectedly fell in May as the boost from the preemptive buying of goods like motor vehicles ahead of the Trump administration’s tariffs faded, while monthly inflation maintained a moderate pace of increase.”
But that’s not all. Property tax revenue is not going to help when budget negotiations start this summer for the 2025-26 fiscal year.
Mayor Mark McBrayer said, “I think this is a sober reflection.”
Then vs. now
In April, we reported the hiring freeze will save an estimated $1.63 million in salaries and benefits plus another $563,000 in health care. Those numbers now look like $1.32 million and $1 million respectively, Atkinson reported in the meeting.
Savings Atkinson highlighted were:
- Estimated $570,000 on fuel and natural gas. “Some of that is because we’ve had better pricing,” Atkinson told the council.
- $375,000 cutting training and travel.
- $275,000 from the city secretary for a special election, which officials do not anticipate needing this year.
- $540,000 for delaying equipment and material.
- Delaying the following projects:
- Downtown one-way to two-way street conversion, $146,000
- Facility maintenance fund, $195,000
- Garden and Arts Center exterior renovations, $155,000
- Neighborhood plan development and implementation, $350,000
- Transfer station trees, $40,000
- Lake 6 fountain inlet, $125,000
Looking ahead
“Sales tax is the largest funding source for the general fund,” Atkinson said.
The 2024-25 adopted budget was $105.6 million in sales tax revenue, and forecasts are now for $100.8 million.
For the next several months, the revenue is forecast to be below the budget between 1.3 percent and 8.6 percent – depending on the month.
“So, it’s a shortfall of about $4.8 million. Or if you look at it in percentage points, it’s a negative 4.6 percent,” Atkinson said.
The forecast for next year will a be for modest growth pattern – making it even more difficult for the Council to meet rising costs while also keeping property tax rates low.
“My preliminary new property values are lower than expected. In fact, they’re lower than the last many years,” Atkinson said.
New property is expected to come in no higher than $2.8 million.
The stagnation in sales tax growth and new property growth will be, as Atkinson put it, “pretty close to each other year-over-year.”
McBrayer also asked why the sales collection forecast couldn’t be a simple number for the rest of the year – hoping the projection could show something like negative 1 percent every month. But Atkinson explained sales tax projections are seasonally adjusted, and the percentages will bounce up and down every month.
“We need to make the savings that I put up on the charts for you,” Atkinson said.
