Sales tax in June up as fiscal year closes

June 15, 2021

Also: Utility rate increases, budget expectations for FY 2021-22

The City’s fiscal year will close on June 30 to make way for the new fiscal year beginning July 1. The City ends the year on a high note fiscally, with sales tax receipts for (mostly) June sales up 36.2 percent. CFO/City Clerk/Treasurer Jason Muninger talked with City Beat this week about the 2020-21 fiscal year and what is expected for FY 2021-22.

City Beat: This is the busiest time of year for the Accounting & Finance Department, with the current fiscal year winding down and the new fiscal year starting. Let’s start with the old: How has the City performed fiscally for FY 2020-21?

Muninger: The City has performed very well for Fiscal Year 2020-21, especially given all the unknowns we have faced this year due to the pandemic. We will end the year 5.5 percent over last year’s sales tax collections, which is 11.2 percent over what we anticipated when we finalized the budget at this time last year. Of course at that time, we had no idea how the pandemic would impact local sales tax so we hoped for the best but prepared for the worst. So needless to say, this is excellent news.

What do you attribute this to?

It’s impossible to say with any certainty why sales tax revenues go up or down for any given period of time, but it’s likely the fact that Bartlesville residents continued to shop locally despite the pandemic, including those who received and spent their federal stimulus funds with local retailers. We did see a correlation in the timing of the stimulus fund issuances and increases in sales tax receipts.

How do collections compare this June to the same month of previous years?

It is the largest June collection the City has ever received; however, it is important to keep in perspective that these comparisons are being made to June of last year, which was historically low in sales tax revenue. We collected $1.86 million in June FY 2020-21, compared to $1.37 million last year and $1.65 million two years ago. For comparison purposes, collections were $1.53 million in FY 2017-18 and $1.46 in FY 2016-17.

How is next fiscal year, FY 2021-22, projected to do in comparison to FY 2020-21?

That is uncertain. We typically use a five-year trend analysis to project an annual growth factor. With the uncertainty over the past year’s pandemic, coupled with the stimulus payments, we felt it most conservative to budget “no growth.” At the time of the budget’s assembly (early May), we used average collections for May and June to calculate a total annual collection. We then used that number as our FY 2021-22 revenue number for sales tax.

The City is reporting higher sales tax for the current fiscal year than anticipated yet also announced recently that Bartlesville utility customers will pay an additional 7.8 percent in utility fees next year. Can you explain why that is?

Sure. Sales tax revenue and utility revenues are completely separate sources of funding, with sales tax revenue making up the bulk of the General Fund and utility revenues funding utility services and expenditures. The General Fund is used to fund almost all City operations, which includes General Fund personnel and all City programs and services except utilities.

Utility services are Enterprise Funds, which means they are treated and run as though they are their own companies and have to stand on their own, meaning they are funded through utility rate revenues for operations and utility capital fees for infrastructure improvements.

The City is under mandate by the Oklahoma Department of Environmental Quality and the Environmental Protection Agency to make extensive upgrades to its waste water infrastructure, including an estimated $45 million in waste water treatment plant renovations. The cost to complete all required waste water utility upgrades is around $65 million. In recent years we have addressed these expenses on a “pay as you go” basis; however, that cannot be done for these upgrades, as extensive financing will be required.

The water and waste water rate increases, which also go into effect July 1, will fund these improvements.

These adjustments include a $1 increase for base water rates and a $0.25 per thousand gallons for water, a base increase of $2 and an incremental rate increase of $0.20 per thousand gallons for wastewater, and an increase of $1.50 for sanitation carts in addition to an increase in commercial sanitation rates.

For Sanitation, there will be a $1.50 increase to the monthly residential service and a slight increase in additional poly carts. These funds are needed to continue funding the services we currently provide. It’s worth noting there hasn’t been a rate increase in Sanitation for eight years, while costs for the City to operate the program continue to climb.

While no one likes to implement rate increases, they are a necessity for the City to meet ODEQ and EPA mandates and to continue the level of service we provide. Other cities face these challenges as well. These increases will bring our rates from the lower end of the spectrum to around the middle in comparison to other cities our size.

For more information about the City’s utility capital needs and the required funding, see future editions of City Beat.