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City revenues showing strong growth

City tax revenues have grown for the past eight consecutive months, leading a net gain of $11 million in the first half of fiscal 2011, said City Budget Director Craig Freeman.

Freeman concedes the momentum began with the spring storms. But as that’s trailed off, spending has continued to be much better than last year.

Around May, storm damage insurance claims flooded cash into auto body shops, roofing, building materials, tree trimming, glass companies, hotels, motels and restaurants. The resulting spending and jobs had a trickle-down effect, aiding all manner of business throughout the city.

“It’s the strongest growth in (year-over-year) sales tax we’ve seen in almost 30 years – since the oil boom,” said Freeman. “The growth we’ve seen is almost 15 percent. Normal growth is about 4 percent.

“We do see some underlying growth there too,” Freeman said. “It does look like there’s good growth there when you back out the storm. You have people just out spending money. Information has come out there’s been some growth in employment.

“It would appear there’s been some growth in consumer confidence,” he continued. “It’s very good news.”

The assessment is not counter intuitive to the picture presented by in-coming governor Mary Fallin and retired OSU economist Larkin Warner.

In another development, President Barack Obama last week signed into law an $858 million package designed to help the economy.

The package includes a two-year extension of the Bush-era tax cuts set to expire December 31. It also would extend unemployment benefits for 13 months, cut the payroll tax by 2 percentage points for a year, restore the estate tax at a lower level and continue a series of other tax breaks.

Economists said extension of the Bush tax cuts might trigger hiring by businesses.

Restoration of consumer and business confidence are considered an early sign of economic improvement. Other factors such as purchasing big ticket items (car and homes) hiring, and unemployment and foreclosure reductions tend to follow.

Economic indicators often lag, rather than turning around in lock step. However many economists consider consumer confidence a vital psychological factor in a turnaround.

In hard times, consumer fearful about their jobs may drastically reduce their spending, causing other parts of the economy to falter. It affects business hiring and joblessness. Consumers also hang on to big-ticket items rather than upgrading them with high-priced replacements.

City officials will have a workshop Jan. 25 at the Cox Center to discuss what to do with the new bounty. The public is encouraged to attend.

Since the storm-related revenue increase is likely one-time, discussion probably will likely center on conservative ideas for the money, the budget director predicted. It would be imprudent to hire some city personnel, an on-going expense, for instance, Freeman said. The city is approaching spending the money cautiously.

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