The City Council has passed a resolution which reduces budget appropriations to city departments for fiscal year 2016-17 due to declining revenue.
Per Finance Director/Treasurer Christy Barron, the largest revenue sources to the city’s general fund are down compared to budget revenue projections. Those revenue sources include: Sales and Use Tax – down 2.63%; Fines and Forfeiture – down 16%; and, Franchise Tax – down 4%. Barron states that overall revenue to the general fund are down 3.18% year-to-date.
The budget reductions taken by departments amount to 1.5% of their total budgets for this fiscal year.
“The budget amendment request is something that we have been discussing for a few months because of a steady decline in revenue from our three primary resources. We were hopeful that we would be able to rebound through the holidays, but, that did not occur,” Guy Henson, City Manager said.
Henson continued that a couple of months ago, he asked each department to submit a revised budget, based on a 1.5% cut. “Since the department’s work with their budgets daily, we wanted to give them the opportunity to tell us where they could make the cuts, rather than us telling them where to make them,” Henson said.
Henson said that the departments did a great job in bringing back budgets that cut the required 1.5% or approximately $721,500, but, will continue to allow them to do their jobs without sacrificing positions or services to the residents.
According to Henson, most of the cuts were made by holding positions open and deferring spending on capital improvement projects.
Henson added that Midwest City is like most Oklahoma communities and those across the country that are being adversely affected by online shopping, especially with those companies that are not required to charge sales tax. Recent research indicates that 51% of shoppers are now making online purchases rather than going to brick and mortar store locations and that online shopping revenue has increased over 15% this past year. These are the highest percentage increases ever involving online shopping.
“Our sales tax revenue decline is a direct result of this shopping trend,” Henson said. “That is why it is always important for our residents to shop local first whenever possible. Our city services depend almost entirely on sales tax revenue, but we also want to support the businesses that have invested in our community.”
“If it is necessary to shop online, make sure that if there is sales tax charged for online purchases, the correct Midwest City zip code is entered in the transaction. If a company has a brick and mortar store in Oklahoma and you make an online purchase from them, they are required to charge sales tax. If an online store does not have a brick and mortar store in Oklahoma, they are not required to charge sales tax on the purchase,” Henson added.
Changes in this law would require legislation at the Federal branch of government.
Henson is hopeful that future budget reductions will not be necessary, but, adds that the staff is keeping a close eye on the situation. “We want to assure our citizens that every effort is being made to maintain the highest level of services and further reductions will only be made if necessary,” Henson said.