Inflation is boosting state and local budgets

Sales tax revenues are up almost 20% this year in some North Texas cities compared to last year, largely due to the rising cost of goods.

Why it matters: Sales taxes are the primary driver of state and city budgets.

• Record-high revenues in the past year will give state lawmakers an extra $27 billion during the next legislative session in 2023, per the Texas Tribune.

Zoom in: Dallas city leaders have already increased the budget this fiscal year due to higher-than-expected sales tax revenues.

• The City Council added $20 million to the budget in May to $364.3 million, and the city's chief financial officer predicts seeing an additional $11.2 million by the end of the fiscal year in September.

Flashback: Sales tax collections plummeted in April 2020 during the height of the COVID-19 lockdown.

• By April 2021, sales tax revenue had risen 31% from the previous year, largely due to business reopenings and vaccine rollouts.

By the numbers: Sales tax collections in Fort Worth are up almost $20 million this year compared to last.

• Arlington's sales tax revenue is up to $110 million so far this year — an almost 36% increase compared to last year.
• Plano's increased almost 19% to about $62 million this year.

Yes, but: Dallas' chief financial officer does not expect the trend to continue next year.

• "We will work with our economist to update the forecast for the biennial budget, and closely monitor the effects of inflation, global unrest and consumer confidence for potential negative impacts," Jack Ireland wrote in a memo to City Council.

What we're watching: City leaders will begin budget discussions next month to determine how the money will be spent.