But officials predict smooth recovery from $200,000 budget loss
By Debra Dennis
The Dallas Morning News
A 20 percent drop in sales tax revenue since Sept. 11 has left Westlake more than $200,000 under budget, officials announced this week.
Westlake, a town of a little more than 200 residents, has no property tax and relies on sales from commercial development to fund city services.
But Westlake Town Manager Trent Petty said the city has adequate reserves to make up for the shortfall if needed, so budget cuts aren't likely unless the economy fails to turn around as expected.
"Our large corporate clients have been our bread and butter for a long time," Mr. Petty said. "All of our corporate sales taxes are down. The good news is it's turning around. ... Barring something unexpected, we won't have to rely on the reserves."
The town keeps $1 million to $2 million per year in reserves.
Westlake budgeted $900,000 in sales tax revenue for this year but expects only about $680,000 by Sept. 30, the end of the fiscal year, Mr. Petty said. The shortfall is about $70,000 less than last year's shortage at this time, he said.
"We budgeted less for this year than last year because we knew it would be less. We had a big impact from Fidelity last year, and September 11th caused it to be much worse," he said.
In addition to lower tax revenue, the city must pay $100,000 to Trophy Club to end a disputed public safety agreement. Westlake officials said the city was paying too much for its share of joint police and fire services with Trophy Club.
"We will likely recover that," said Mr. Petty. "But that $100,000 cash wasn't budgeted. We may have to dip into the reserves slightly."
Mayor Scott Bradley, who is unopposed in the May 4 election, said it's too soon to fret over the sales tax shortfall.
"I'm confident we'll maintain a balance between our income and our outgoing. We are seeing some signs that the revenues are going back up," Mr. Bradley said.
Shane Somers, director of hotel sales for Marriott Solana, said reservations there have been off about 20 percent since September.
"We're seeing the same kind of thing – a downturn. Reservations are off a little bit compared to last year," Mr. Somers said.
"We're starting to see a little bit of light. We are seeing an increase. We play on the value of Marriott as a company. We've been here since 1990 and we have good standing in the community," he said.
Westlake is no different from other cities that have experienced a downturn in the economy, Mr. Bradley said.
"We should have expected that," he said.
Statewide, recent sales tax collections were down about 1.5 percent from last year, according to the Texas comptroller's Web site. State sales tax net collections totaled $1.28 billion, compared with $1.3 billion collected last January. The state collects about $14 billion in sales tax revenue each year.
"We have always been very conservative and didn't want to want to spend money we didn't have," Mr. Bradley said.
In addition to operating expenses for the city, Westlake is relying on sales tax revenue to help pay for a charter school the city plans to open in 2003. However, officials said the shortfall won't derail or delay any plans for the school because it can fall back on reserves if necessary.
The opening of the Circle T Mall, scheduled for 2004, should help expand the city's tax base in the long term, Mr. Bradley said.