This year’s uptick in the oil and gas industry has brought a surplus of jobs, people, and apparently sales tax revenue to Midland County. As a result, county commissioners are allocating nearly $12 million in funding to other local governments in Midland.
The breakdown of funding includes $5 million to Midland ISD, $2.5 million each to Midland College and Midland Memorial Hospital, $700,000 to Midland Humane Coalition, $500,000 to Greenwood ISD, $260,000 to the City of Midland, and $100,000 each to Keep Midland Beautiful, Midland County Airfield Foundation, The Field’s Edge, and Chris Davidson Opportunity Park.
According to a document provided to the Midland Reporter-Telegram, “The funds are provided in exchange for the entities agreeing to do a service that the county may legally perform.” For example, MISD will use the funds on grounds-keeping and security officers, the hospital will use them for mental health care improvements, and the Chris Davidson Opportunity Park will use them for paving.
The county’s FY 2017-2018 budget, which began October 1 of last year, included a total sales tax revenue collection of $29 million that has already been surpassed with two months still left in the fiscal year. According to the state comptroller website, approximately $39 million has been collected as of August 8.
The surplus is a direct result of the Permian Basin’s growing oil and gas economy and the county’s tendency to dramatically underestimate sales tax revenue in their annual budgets.
Between 2010 and 2017, the county collected $271.1 million in sales tax revenue, while only budgeting for $194.7 million. The county underestimated the revenue gained from sales tax by an average of 39 percent every year, which over seven years equated to an excess of $76.4 million.
This extra revenue, combined with a surplus of property tax collections, is reflected in Midland County’s bloated fund balance, which at the end of FY 2017 was $109.5 million according to county financials.
In lieu of further expanding their reserves, the county’s allocation of funds to other entities in exchange for services appears to be a positive move.
However, a sales tax revenue surplus also presents an opportunity to lessen the financial burden on Midland homeowners by lowering the property tax rate – an opportunity that has clearly presented itself for years, considering the county’s history of budget vs. actuals.
Commissioners have pointed to slumps in sales tax revenue as justification for increasing property taxes, given the two revenue streams each fund 30 to 40 percent of the county’s budget. Comparing it to a “see-saw” effect, when a decrease in sales tax revenue is predicted they’ll often raise property taxes. However, when sales tax revenue is up, it’s rare to see property tax bills go down.
Midland County commissioners meet Monday, August 13 at 9:00 a.m. in the county courthouse, where they will propose the new property tax rate. According to their “see-saw” effect, this year’s gain in sales tax revenue should take some weight off property taxpayers.