Economic slowdown causes city budget concerns

One of the key indicators of Columbia’s economic vitality is the city sales tax receipts, particularly when they are broken down by category. They indicate how much money people are spending in stores, restaurants and gas stations and for construction and improvement projects.

For City Manager Bill Watkins, it’s a bottom line problem because sales tax receipts make up nearly 30 percent of General Fund revenues. Watkins sent out a memo on April 12 advising his staff that the slowing of Columbia’s economy “can have a major affect on the General Fund’s budget.”

The city’s budget for the fiscal year that began in October estimates a sales tax growth rate of 4.6 percent, but the actual growth rate so far this year is about 2.6 percent, which means less revenue than expected.
“Cigarette tax, corporate fines and building permits are all running short of budget projections,” Watkins said. “Rising gasoline prices have residents conserving, so the gasoline tax (revenue) is down.”

Watkins asked department supervisors to curb discretionary spending and placed a hold on purchasing several supplemental items.

“With the cooperation of everyone,” he wrote, “we can make it through this rough spot without a budget crisis.”