POSTED ON MAY 18, 2011:
Sales tax figures look good, but city officials anxious for uptick in employment and construction permits
While it's not an all-encompassing reflection of the financial health of Tulsa, the monthly sales tax receipts total is certainly one of the better economic indicators available to city officials.
And for the past eight months, that indicator has been good. Since the release of the October 2010 sales tax receipts report -- a period covering receipts from the middle of August 2010 through the middle of September 2010 -- Tulsa has reported growth over the previous year's figures, a trend that demonstrates that the city is in the midst of a solid, if only modest, recovery from the Great Recession.
Those figures have ranged from a gain of 6.7 percent in November 2010 -- when the city took in approximately $1.1 million more than it did in November 2009 -- to the 0.14 percent gain reported in April, an increase of only approximately $200,000 over April 2010. Last week, city officials reported the May take was up approximately 3.1 percent.
Mike Kier, the city's finance director, said Tulsa actually emerged from the decline in sales tax receipts a little quicker than he anticipated. Kier had forecast the reduction in sales tax receipts would continue through the current fiscal year, which ends June 30, but that has not been the case.
"It's good to have gotten out of it as soon as we did," he said. "We're averaging a 2.5 percent increase (over the previous year), and we expect that to hold up for the current fiscal year. That's a much better situation than trying to work through a decline. That's positioned us better to set the budget for next year."
Kier said he is forecasting another 2.5 percent increase in sales tax receipts for next year, meaning those figures will have increased 5 percent over a two-year period. Those numbers certainly are preferable to the steep declines Tulsa was experiencing not so long ago, but they are hardly a reflection of a booming economy, he said.
"I think modest is a pretty decent description of it," he said.
Just the Tax, Ma'am.
Over the past 18 months, Tulsa's monthly sales tax receipts reports have reflected the city's long climb back to a more stable financial footing. The January 2010 report showed a reduction of 11.4 percent over the previous year, while February 2010 reflected a 9.8 percent decrease, March 2010 was down 11.6 percent and April 2010 declined 10.6 percent. Those double-digit decreases necessitated cutbacks in virtually all facets of the city's operation.
But the situation began to improve a year ago, the beginning of the end for the economic freefall in the city. In May 2010, Tulsa's sales tax receipts actually increased 3.7 percent -- the first time in 14 months the total for the current month was higher than that same month a year before. June 2010 and July 2010 brought more reductions -- though they were comparatively mild, at 0.5 percent and 0.90 percent, respectively -- before the city experienced an increase of approximately 1.6 percent in August 2010.
Tulsa's last decrease was in September 2010, when sales tax receipts fell approximately 2.3 percent from the previous year. Since then, growth has been steady but unspectacular.
Kier is encouraged by those figures, but he would like to see improvement in other economic indicators, as well. Along with increased sales tax receipts, Kier keeps close watch on the unemployment rate and the number of permits issued for housing and commercial construction projects. Both those indicators continue to be sluggish, he said, though the metropolitan area's unemployment rate of 6.5 percent in March -- down from 8.3 percent in March 2010 -- is considerably better than the national rate of 9.0 percent.
While the national economy added 400,000 jobs last month, Kier noted the national unemployment rate actually climbed -- a phenomenon he said is not unusual in a recovering economy. Many of those who had ceased looking for work at the height of the recession and were dropped from the unemployment rolls tend to re-enter the job market when the outlook improves, he said, thus driving the unemployment rate back up.
For that reason, it's more important to chart the total number of jobs, he said.
"If you were to see 2 or 3 percent growth in employment, that would be a good sign of a nicely improving economy," he said.
Nevertheless, Tulsa has a long way to go before it can match the kind of growth it was experiencing in the summer of 2008, just before the recession took hold in this part of the country. From July through September of that year, Kier said, the city's sales tax receipts averaged an 8 percent increase -- the kind of robust growth Tulsa hasn't come close to matching since.
"The nice part is, we're coming out of this much faster than we did in 2001" during the last economic downturn, Kier said, explaining that it took the city five years then to achieve the same rate of sales tax growth it had experienced before that recession. "In this case, it may take us four years -- maybe a little more, maybe a little less -- to get back to where we were earlier."
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