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January 20th, 2010
Sales tax drop triggers city hiring freeze

012010cityhallSan Marcos City Hall.

STAFF REPORT

San Marcos city officials are implementing a “selective” hiring freeze after this month’s sales tax allocation from the state came in 7.65 percent lower than in January 2009.

The city received an allocation of $1,442,710.61, a drop of nearly $120,000 from an allocation of $1,562,260.84 12 months ago. This January marked the seventh straight month that the city’s sales tax allocation came in lower than in the same month a year earlier. The sales tax allocations from the state comptroller’s office reflect sales activity from two months before, meaning the January check is based on November 2009 sales.

The sales tax allocation year for 2009 ended with the city declining in sales taxes for the first time since 1987. San Marcos finished 2009 with $17,798,267.42 in sales tax collections, down $584,606.71 (3.18 percent) from $18,382,874.13 in 2008, which was the city’s all-time high.

In response to the city’s consistent decline in sales tax collections, San Marcos City Manager Rick Menchaca directed the hiring freeze earlier this month. The freeze will not apply to public safety and other “crucial” positions.

“Current vacancies will be reviewed to determine if they will be placed on hold,” Menchaca told the department heads in a memo. “Several positions have been previously approved for hire, however, starting immediately, before a position is to be interviewed or hired, additional approval from the City Manager’s Office is required.”

Sales taxes are budgeted to account for 48.1 percent of the city’s $39.9 million operating budget for FY 2010.

For the first three months of the fiscal year, the city’s sales tax haul has decreased $310,674.81, or 7.05 percent, from a year ago. The decline is strong enough to initiate the city’s contingency plan, which comes into play when the budgeted sales tax shortfall surpasses $500,000 or comes to five percent less than the amount budgeted.

Under the contingency plan, the city can reduce services, programs and workforce to keep expenditures even with revenues.

The city’s adopted budget for FY 2010 calls for $18,511,430 in sales tax revenue. If sales tax collections for the last nine months of the fiscal year are even with the same nine months in FY 2009, then the city would collect $17,678,717.19, which would come to $832,712.81 less than projected.

Cities across Hays County collected barely more than $2 million between them in sales taxes this month, falling 6.45 percent from a year earlier. Kyle’s 21.06 percent sales tax growth kept the aggregate losses from being even greater. Bolstered by new retail openings in the last year, Kyle collected $198,193.40, up from $163,712.66 a year earlier.

Buda’s sales tax take fell 9.42 percent from a year earlier, to $258,718.58. The largest drop among Hays County municipalities occurred in Wimberley, which fell 39.2 percent to $36,967.57.

Unincorporated portions of Hays County also endured a year-over-year decrease, with its $766,854 allocation this month representing a 4.76 percent decline.

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0 thoughts on “Sales tax drop triggers city hiring freeze”

  1. The City of San Marcos continues to spend beyond its means. Back in May of last year, I looked at the publicly posted financial statements and observed the total long-term debt increased from $122,310,000 (‘05) to $136,010,000 (’06) to $175,990,000 (’07) to $247,750,000 (’08). These figures are from the annual financial reports posted online at the city website. (See “Table 5 City of San Marcos’ Outstanding Debt at Year-End” in each year’s report for the details.)

    In just 3 years (’06, ’07, and ’08) we more than *doubled* our total long-term debt.

    Citizens of San Marcos have been belt-tightening for some time in the midst of our economic upheavals. We need our city leaders to demonstrate fiscal responsibility at the local level. Just because we are spending wildly at the Federal level, doesn’t mean we can’t keep our community financial house in order here locally.

  2. I warned about this while final budget prep was being done for 2009. These are financial hard times, sales tax revenue is projected to be short by almost a million dollars. Did they budget for it in 2010? No! Are we going to do anything about it? Who’s running for Mayor this year?

  3. If they can do what they do without the the additional employees now, why could’t they before all this started? It is time for all government to get smaller and STAY smaller.

  4. If you want smaller government and these employees to more work with less then be ready for longer wait times to get services. Longer wait times to get a returned called about your electric bill, a permit for a sign, permit to open your business, to get an answer on the wild dog running around then please hold just a bit longer as we now have a 30min wait phone time. Pls do not hang up or you will lose your place in line. Nobody wants to pay taxes until if is a problem that they have to wait for services to be delivered. Hey, they might even have to wait longer for all those request for public information to be filled.

  7. Kind of catch 22 …the bigger the government, the more permits, paperwork, and fees forced on the public. After all, someone will now need to write, enforce and handle all of these permits, fees, and paperwork, thus government employees (especially on the administrative end) are protecting/justifying their jobs. I have especially seen this happen over the last 5 years at school district. Too administrative heavy and now those high position people are generating alot of useless, busy work for others in order to look busy and important.

    In other words, freeze/reduce administrative positions to save actual service jobs.

  8. ‘SAD” brings up an interesting point. Why is it that during these ‘cutbacks” it is always the low end paying jobs which are cut (the workers) and not a better economic solution of cutting the pay of top administrators? Isn’t it better economically for our city if two workers making roughly $20-$30k keep their jobs and support their families while still saving the necessary money by cutting a few top administrators salaries by say 20%? Since most at that level are making over $100-140k, a 20% cut for them still leaves them with a livable wage far above what is necessary to survive. Perhaps the old wristbands of WWJD should make a comeback.

  9. Pingback: QUOTE CORNER - San Marcos Local News

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