Slump seen in sales tax
Township eyes drop in retail sales taxes
Township board members intend to be conservative with spending this year as sales-tax revenues continue to drop across the county as the region struggles with lower oil prices.
As the dark cloud of low oil prices continues to hover on the horizon of The Woodlands’ economic prosperity, the township’s governing board likely will be cautious with spending in thecomingyear.
In spite of modest growth in revenue in 2015, the board might put off some capital projects, including the renovation of Northshore Park, until the economic climate is more stable.
The township exceeded its budgeted revenue over expenditures by $3 million in 2015, collecting $51 million in sales and use tax — a 3.7 percent jump over 2014 collections — and $37.6 million in property tax— nearly $500,000 higher than budgeted.
Hotel Occupancy Tax revenue in 2015 amounted to $7.8 million — a 7.4 percent increase over 2014. Two major hotels added to the roster this year — The West in The Woodland sand Embassy Suites The Woodlands—are expected to add to the growth in hotel tax collection.
Still, the area sawa fall in the fourth quarter last year in sales-tax revenue from the construction and oil and gas industries, dropping by 30 percent and 24 percent, respectively. The real estateandrental industries both fell by50percent.
Monique Sharp, assistant general manager for finance and administration for The Woodlands Township, assured the board that the 2016 budget was adjusted to weather the fall in those industries, setting the expected revenue closer to what it was three or four years ago.
The area that concerns Sharp is retail sales-tax collection, which accounts for 43percentof thetownship’s revenue. The preliminary numbers from January fell 3 percent under budget for 2016. February’s preliminary numbers were just 1.7 percent over budget.
“Right now, looking at the data, I cannot confidently say that we will meet our sales-tax budget,” Sharp said. “That’s the number we really need to concentrate on.”
“Nobody knows. Nobody has a crystal ball, but I’m increasingly concerned about spending money, especially on things that are discretionary, like Northshore Park,” said board member Mike Bass. “It doesn’t have to be done this year … I’d much rather spend the money when we actually have the money than spend the money thinking we’re going to have themoney.”
Caution over the economic climate has already played a role in the deferral of a project to build a parking garage and transportation center — which would have cost The Woodlands $1.7 million — although concerns about complying with federal grant obligations were the main deciding factor inthedeferral.
The board is expected to discuss plans for a $1.2 million renovation of Northshore Park at its March meeting. The township already has spent nearly $100,000 on consulting and design services and has directed the design process over the past several months. Still, there is some controversy and uncertainty surrounding the possible inclusion of a boathouse that would primarily be used by private rowing clubs.
The board may consider deferring this project.
At least one board member has argued that there are other places where costs couldbe cut insteadof putting off the renovation of thepopular park.
Board member John McMullan has criticized the use of township money to run the Waterway trolley route. Currently, The Woodlands pays $214,000 in annual operating costs for the service and is looking at possibly expanding the service foranadditional $94,000. Another possible expansion could cost an additional $114,000, should the townshipchoose to proceedwith it.
“If you ask residents of The Woodlands, they would rather see Northshore Park fixed than have money spent on these trolley systems,” McMullan said.
Sharp also suggested deferring a $1.6 million irrigation project as anoption for saving money in the 2016 budget.