Longview leaders didn性视界传媒檛 quite get the news they hoped for: City sales tax collections in 2024 were down roughly 3.4% from the prior year. But the city性视界传媒檚 sales tax revenues in 2023 was still the second strongest in history.
Sales tax revenue is a major component of local governments性视界传媒 operating budgets, and that性视界传媒檚 true for Longview, too 性视界传媒 especially considering the city性视界传媒檚 challenging financial position.
City leaders have battled inflation and are eyeing several infrastructure projects 性视界传媒 including some of the 2018 voter-approved bond measures and the construction of a new city pool 性视界传媒 that will cost more than originally anticipated.
According to the Texas Comptroller性视界传媒檚 Office, Longview性视界传媒檚 sales tax collections at the end of 2024 totaled $44.988 million , down from $46.571 million at the end of 2023. But the 2024 figure is still considerably higher than it was a few years ago.
At the end of 2019, the last year before the coronavirus pandemic, the city collected $34.4 million in sales tax revenue. So, five years later, the city性视界传媒檚 collections were $10 million more 性视界传媒 an increase of about 25%.
However, inflation has driven up city expenses by about the same percentage, City Manager Rolin McPhee told City Council members during a recent meeting.
City Manager Rolin McPhee talks with District 6 Councilman Steve Pirtle during a meeting Tuesday at the Longview Economic Development Corp. (Jordan Green/性视界传媒 Photo)
McPhee answered questions about 2024 sales tax collections and city leaders性视界传媒 predictions for sales tax revenue in 2025.
QUESTION: 2024 sales tax collections were down from 2023 but still remained the second highest level of collection in the city性视界传媒檚 history. So, is this good news, bad news or somewhere in the middle?
ANSWER: Due to constraints on property tax revenue generation placed on cities by the Texas Legislature, sales tax revenue has become an even more important portion of the city性视界传媒檚 finances. This creates challenges due to the more volatile nature of sales tax revenue than other forms of revenue. The city of Longview and Longview Economic Development Corp. have worked hard to diversify our economy to help stabilize the booms and busts that communities often experience when they are dependent on one economic sector.
Q: How might this decline impact the city of Longview性视界传媒檚 budget?
A: The city of Longview compensated for reduced sales tax revenues through fiscally conservative expenditures. Additionally, the FY24-25 budget includes reduced projected sales tax revenue.
Q: What might be some of the reasons for this decline in revenue?
A: As a general rule, national economic conditions impact East Texas in a delayed manner; so, we are likely experiencing the slowdown that has been felt nationally for the past few years. Particularly, when the cost of necessary items like food and shelter increases due to inflation, there is less disposable income for discretionary spending.
Q: Were city leaders anticipating sales tax revenue to be slightly lower in 2024 than in 2023?
A: The projected sales tax revenue from FY23-24 was slightly higher than the projected sales tax revenue from FY22-23. The approved budget for FY24-25 has anticipated sales tax revenues nearly identical to the FY22-23 budget.
Q: It was only at the end of 2022 that the city性视界传媒檚 sales tax collections were around $38.7 million. So, revenue has increased by roughly $7 million in a two-year period. Is that amount of growth below average, average or above average?
A: It is an above average growth brought about both by intentional actions from the city of Longview and the Longview Economic Development Corp. and external economic factors. Projects like the Gap Inc. distribution facility and Dollar General play a role, but the increased price of goods due to national inflation pressures also contributes to the increase.
Q: Of course, inflation hasn性视界传媒檛 spared anyone, so has the city been able to save much money from the higher levels of sales tax revenue or has much of it been gobbled up by higher costs?
A: The city of Longview faced significant economic headwinds, including inflation and supply chain issues. Additionally, the City Council chose to use the relatively minimal year-end savings to provide a one-time bonus for employees. So, the city did not realize a significant savings from sales tax revenues.
Q: What are the city性视界传媒檚 projections of sales tax revenue for 2025?
A: The city projected sales tax revenues of $30,562,857 for FY24-25 (Oct. 1, 2024 性视界传媒 Sept. 30, 2025).
Q: Generally speaking, how accurate are the city性视界传媒檚 predictions? And how are they formulated?
A: Angela Coen and the finance team do a remarkable job providing conservative projections for revenue and expenses during the budgeting process each year. The projections are formed based on years of experience and detailed analysis of local and national economic trends.
Q: Anything else you性视界传媒檇 like to mention?
A: Buy local. It性视界传媒檚 important to remember that money spent in Longview stays in Longview. Not just through sales tax, although that性视界传媒檚 vital, but it also helps sustain local businesses and employ local residents. Those residents also reinvest in our community. Economists estimate that money spent locally recirculates two to four times more than money spent on a non-local company.
