Page 53 - Watauga FY22-23 Budget

BUDGET OVERVIEW – BUDGET-IN-BRIEF

Sales Tax Collections

The second major financial consideration that guides the development of the
budget for the upcoming year is the projection of sales tax revenues. The City's 1.25%
share of all local taxable sales are remitted by merchants to the State Comptroller’s
Office and then distributed to the City on a monthly basis. Sales tax revenues comprise
30% of General Fund (GF) revenues. The City has experienced better than anticipated
sales tax and we are forecasting FY2021-2022 sales tax revenues to end the year
approximately 7% higher than FY2020-2021 actuals. Sales Tax for FY2022-2023 is
projected to be 3% above the current year forecast for the 1.25 cent sales tax.

In May, 2021, voters approved a one and one quarter cent sales and use tax for general
government services. This allows for additional revenue to operate and provide public
services. The additional ¼ sales tax is used for general government services and will
provide funds for continuing street maintenance.

Sales Tax revenue for the City
is subject to the general
economic environment of the
DFW Metroplex. The City
continues to see growth in
economic activity for current
businesses, attraction of new
businesses, and online sales
tax growth. The gains from
sales tax are also attributable
to inflation with the higher cost
of goods and services.

Other taxes - Include receipts from the operation of bingo halls in the City.

Utility Franchise Fees – This revenue category consists of a percentage of local gross
receipts remitted to the City by each privately owned utility (electric, telephone, gas, waste
and recycling collections, and cable) providing services to Watauga citizens for their use
of the City’s right-of-way. This can be the right-of-way used by the companies for their
utility lines or the use of our streets for their vehicles. Revenues are based on terms of a
franchise agreement between the City and each utility. The majority of franchise revenue
is based on a percentage of gross revenues from the utilities.

Projected revenues for these fees are generally based on population estimates. Recently,
weather conditions and the economy have been significant factors in a decline of
revenues as citizens have been more frugal in utilization of resources, which has led to
lower utility revenues. In addition, the Texas Legislature passed Senate Bill 1152 which
undercut the collection by cities of right-of-way rental fees from companies that provided
both cable and telecom services. Beginning January 1, 2020, these companies now pay
the greater of the two charges measured on a statewide basis, but not both and the City
has seen a significant decline in these revenues as a result. We are anticipating the

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