Waco officials investigate causes of sales tax loss in 2023


Waco spending went from bad to worse during 2023, ending with a thud in December with a sales tax loss of nearly $1 million.

A joyous season apparently became a cautious one for local shoppers as tax receipts for December sales dropped 16%, according to a Texas State Comptroller’s Office report this month.

The slump occurred even as national retail sales increased 0.6% in December 2023 compared with December 2022.

Those paying attention might have seen the holiday doldrums coming.

The second, third and fourth quarters of 2023 saw spending declines compared with the same quarters in 2022, said Karr Ingham, an Amarillo economist who tracks local trends in his monthly Greater Waco Economic Index.

The numbers included a 3.7% dip in retail spending during the fourth quarter, said Ingham, who combines Waco sales tax revenue with its suburbs.

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Signs announce Black Friday sales at Academy Sports & Outdoors in this 2020 file photo.

Officials preparing budgets circle February, knowing that cities, counties and special taxing districts receive sales tax rebates reflecting retail activity in December. Waco was joined by Woodway and Lacy LAkeview in seeing double-digit declines, while the city of Bellmead, which has a strong retail presence, received a rebate of $492,539, a decline of 4.4%.

Waco collected a $5.03 million rebate this month, more than 16% below the $6.02 million received in February last year based on December sales.

Nicholas Sarpy, city of Waco’s finance director, said there is no denying the drop of nearly $1 million is disappointing, but his office is still investigating the causes.

Much of the loss is due to a $547,000 “adjustment” imposed by the Texas Comptroller’s Office, meaning the city’s rebate was reduced by that amount. Sarpy said that could mean the state previously sent a rebate to Waco that rightfully belonged to another city, or had sent Waco a monthly rebate larger than warranted.

“We definitely had been noticing a slower growth rate, intermittent growth and decline,” Sarpy said of spending trends. “My team looks at it every month, asking what’s the reasoning behind it. Unfortunately, we have figures, but not numbers behind the figures. Where are the declines? Did people not buy things? What are they buying? I can hypothesize.”

Sarpy said he and his colleagues will begin digging into the numbers to answer those questions. He believes consumer confidence is improving but still not where it once was. Consumers are not confident wages will improve, or the economy in general will regain its vigor. Until they become more secure, Sarpy said spending “will remain close to vest.”

He said he’s not ready to tinker with budget estimates for the fiscal year that began Oct. 1, when his staff predicted sales tax revenue totaling more than $55 million. If March numbers disappoint, he may reconsider.

“We hope this is an anomaly,” Sarpy said. “We knew a bad month was coming, a really bad month was coming. Maybe this was the bottom, a reset. On my end, we need one more month of data to decide if we really should adjust.”

Through the calendar year to date, Waco has received rebates of $10.6 million, about 9% lower than rebates through February last year. Those numbers would reflect November and December sales combined.

It may not be a consolation for local officials, but the State Comptroller’s Office reports that eight of the 20 largest Texas cities receiving sales tax receipts suffered year-over-year declines this month.

Of the 12 cities that enjoyed year-over-year increases this month, five saw a rise of less than 1%. Those included San Antonio, Austin, Lubbock and Sugar Land, according to the Comptroller’s Office.

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