Page 124 - CityofWataugaAdoptedBudgetFY25

BUDGET SUMMARY

Sales Tax History

Sales taxes are collected by the
State from the sale of goods and
services. Goods and services are
taxed at 8.25% in the City of
Watauga, of which 6.25% is the state
portion. The remaining 2% is
received as follows: The General
Fund receives 1.25% of each dollar
taxed within the City. The Crime
Control and Prevention District
receives .5% and the Watauga
Economic Development Corporation
receives .25%. The Mixed Beverage Tax – 1.5% (or 10.7143% of the State’s 14%) of
each dollar taxed within the City is allocated to the General Fund.

Sales tax is the second largest source of revenue for the general fund. A significant
portion (28%) of the city’s general operating revenue is derived from sales tax. Sales
taxes also fund the operations for the Crime Control and Prevention District and the
Economic Development Corporation activities.

FY2023-2024 sales tax receipts were slightly lower than anticipated and are trending 2%
under budget and 1% over prior year actuals. We have conservatively estimated FY2024-
2025 sales tax to be 1.5% over FY2023-2024 year-end projections. The conservative
approach places the budget in the position to absorb economic losses without a reduction
in service levels. The City continues its economic development and redevelopment
strategic planning that is essential for the City to increase its sales tax revenues and
reduce its dependency on property taxes to fund basic City services. The City’s
economic development goals include attraction of quality visually appealing businesses,
as well as revitalization and investment in areas that have seen some deterioration of
economic activity. Efforts to maintain and grow our sales tax base continue to be a high
priority.

Franchise taxes are collected primarily from utilities and fees charged for the privilege
of continued use of public property and municipal rights of way. Most franchise fees are
set by the State of Texas and the City of Watauga collects the amounts prescribed by
law. However, our solid waste franchise fees are established in our contract with our solid
waste hauler and are equal to 5% of gross revenues.

Licenses and permits revenues include fees charged by the City for business licenses
and permits for general construction. Fees are charged for City inspection of electrical,
plumbing, and mechanical installations. Over the last few years, this revenue has
fluctuated due to construction activity in the City; however, as the City is approximately

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