November sales-tax check sets record

For November, the City of Odessa already has much to be thankful for after it received its largest ever sales-tax check in the amount of $3,020,528.29.

The amount surpassed the previous record-setting check in the amount of $2,988,244.24 received in August and is a 25.84 percent increase compared to November 2010.

The amount includes the economic development sales-tax of a quarter cent. The Odessa Development Corporation will receive $604,105.66 of the total check.

Sales-tax revenue is generated from sales-tax revenue collected two months prior to collection, meaning the November collection is based on September sales.

During the last three months Odessa increased at rates of 31, 34 and 26 percent compared to the previous year, and Midland increased by 27, 19, and 18 percent, respectively. With the exception of Abilene which had comparable growth, larger cities like El Paso, San Angelo and Lubbock saw much more modest increases.

“That shows we’re doing a lot better (than other cities), economy-wise,” Zentner said. “There’s more available money to be spent per person.”

The cause of the expendable income is all thanks to the oil industry, Zentner said.

“It’s because of the oil field business. That’s what’s driving our economy out here,” he said. “When the oil business seems to be doing quite well, we do well.”

Because of Odessa’s dependence on the oil industry, the city’s economy is more influenced by the oil industry than by state and national economic trends,” Zentner said.

The year-to-date sales tax revenue increased 30.43 percent or $1,044,713.57, compared to the budgeted amount expected for November during the 2011-2012 fiscal year. The 2011-2012 year-to-date amount is 29.30 percent or $1,014,646.33 more than the previous fiscal year.

While the economy is booming, Zentner said the rates at which the sales-tax revenues have been increasing are abnormal compared to more normal rates of 3 percent to 5 percent of some larger cities.

But he doesn’t see any signs of the local economy slowing down. The city has budgeted $20,770,356 in sales-tax revenues for 2011-2012.

“I’ve been expecting it for the better part of a year that (sales-tax revenue rate) would slow down and get back more to normal, (but) I haven’t seen it yet,” Zentner said.

Though there are no indications of an economic downturn, ODC President Austin Keith said the large sales-tax checks just mean more money saved for a rainy day for the corporation.

“We’ve been blessed to receive more sales-tax income, but we never know what’s going to happen,” Keith said. “Just because we’ve got it, doesn’t mean we have to spend it. There may be a day when things get tough again.”

The ODC allocates the sales-tax income it receives to manufacturing or industrial businesses that qualify for 4-A sales-tax incentives. Businesses must go through the ODC’s chain of command and be approved by a series of economic development directors and committees before they can receive sales-tax incentives.

Keith said because of the multitude of requirements to qualify for incentives, the amount of businesses applying for incentives are not immediately affected by news of large sales-tax revenues. Keith said the increased revenue does not have an immediate impact on ODC activities of any kind.

“If you look back on the records, there’s a bunch of years where we had nothing come,” Keith said. “It’s nice to have that money. All I can say, is we’ll see what we need to do with it.”

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