Sales tax revenues dropping in North Texas

Sales tax revenues are dropping in many North Texas cities after huge jumps largely due to the rising cost of goods.

Why it matters: Cities are in the midst of adopting budgets for the next fiscal year based on projected property tax and sales tax revenues.

• Many North Texas cities are increasing their budgets despite proposing property tax rate cuts.

Details: Dallas increased its sales tax revenue by $15.5 million from October 2022 through February.

• But, in three of the four months since February, the city had lower collections than in the same period last year, per a city memo.

By the numbers: Sales tax collections were down nearly 1.5% in June in Dallas compared to the same month last year, according to the latest Texas comptroller figures.

• Frisco's year-over-year sales tax collections dropped nearly 8% in June. Irving had a 2% drop.
• Arlington had one of the sharpest declines — more than 20%.
• Meanwhile: McKinney had a nearly 5% jump in sales tax revenues in June.

Yes, but: Total sales tax collections from January to June are still up year over year in most North Texas cities.

• Fort Worth, for example, has collected 8.6% more in sales taxes in 2023.

• Arlington's sales tax collections are an exception, down nearly 3.5% year over year.

What's happening: Inflation has been slowing since last July, but prices are still high.

• The Consumer Price Index rose 4% in the 12 months through July in Dallas-Fort Worth, down from last July's high increase of 9.3%.
• Local price gains remain higher than the national CPI rise of 3.2% in the 12 months through July.

What's next: Dallas' contract economist, Dearmon Analytics, predicts sales tax collections will continue to slow over the next several months.