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APPROVED BUDGET FISCAL YEAR 2022-2023
Sales tax revenues are the most difficult to project for the operating budget because the
increases in revenues sources are dependent upon area economic conditions and consumer
confidence. In fiscal year 2022-2023, sales tax is projected at approximately $9.9 million. The
2022-2023 sales tax budget total has an economic contingency of approximately $1,000,000 or
approximately 10% of estimated collections included. This allowance has and will continue to
help offset any decreases in sales tax collection caused by economic conditions. During fiscal year
2021-2022, the City recorded monthly sales tax increases for 11 out of the 12 months and ranged
from a -2.4% decrease to a 25.7% increase over the prior year. The current economic
environment, prior economic stimulus programs, and inflationary pressures all contribute to
continuing our conservative approach to budgeting sales tax revenue.
PROPERTY & SALES TAX REVENUE
30.00 60%
25.00 50%
20.00 40%
15.00 30%
10.00 20%
5.00 10%
- 0%
Property Taxes Sales Taxes Sales Tax as Percent of Revenue
The chart above shows revenues generated by property taxes for both General and Debt
Service Funds, plus sales taxes for the General Fund. Together, property and sales taxes
account for approximately 70% of the General Fund revenues. It has been the policy of the
City Council to grant property tax relief to citizens to partially offset increases in appraisal
values. Over the past twenty years, well over $20 million in property tax relief has been
granted through tax rate reductions alone. The City also provides the maximum homestead
exemption and additional tax relief for senior and disabled residents. The primary driver of
property and sales tax is economic strength and consumer confidence. Sales tax projections
for 2022-2023 have once again been budget conservatively.
Beyond property and sales tax revenue, franchise taxes account for approximately 6% of
budgeted revenues or $2.51 million. The Texas Legislature has eliminated various components
of franchise fees over the last few years making this a difficult category to project; however, we
have researched details of the legislative changes and spoken with telecommunication
providers to better understand how the changes will impact this revenue stream. Together
with an analysis of recent trends indicate that $2.51 million is a reliable revenue budget for FY
2022-2023. Together with property and sales tax revenues these three categories account for
approximately 76% of budgeted revenues.
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