Page 139 - CityofWataugaAdoptedBudgetFY25

BUDGET SUMMARY

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 27% of General
Fund (GF) revenues. The City has experienced volatile sales tax receipts this fiscal year
which are up 1% from prior year-to-date. Sales tax for FY2024-2025 is projected to be
1.5% above the current year-end 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

119