No surprise there. The good news is that it’s not nearly as bad as it could be.
Sales tax revenue could be 3.4 percent lower than planned for this fiscal year, said Controller Annise Parker. That means a shortfall of $17.7 million from what was budgeted.
“I’d like to be proven wrong and see oil prices pop back up and the economy humming along, but we have to be prepared if it doesn’t,” Parker said. “If we are correct in our estimates — and they are estimates — then the administration will have to make changes and cut costs somewhere.”
Mayor Bill White’s finance director, Michelle Mitchell, had a slightly more optimistic estimate, predicting a drop of less than 1 percent in projected sales tax revenues for Houston.
That translates into a budget shortfall of less than $5 million. The city expected to spend $2.1 billion in operating funds in fiscal year 2009, which began in July.
Mitchell and Parker, the city’s two financial gurus, usually match each other in their fiscal estimates. But not this month. Mitchell predicted that post-Ike rebuilding and reconstruction would make up for most of the recession-caused shortfall in other consumer spending. Parker disagreed: “We don’t see (Ike reconstruction) as an add-on to holiday shopping; we see that as instead of shopping.”
Both emphasized the city still will bring in more sales tax revenue than last year, but it will not be as much as anticipated when the budget was finalized in late spring. Since then, the city’s economy has weathered a hurricane, credit and stock market woes, and the official announcement of a national recession. Oil prices also have dropped.
We’ll know who’s right soon enough. The good news, as I said, is that this really isn’t that much in context. Even if Parker’s more pessimistic estimate is correct, we’re talking 0.8% of the city’s budget. That’s a gap that can be bridged without too much pain. The city’s refinancing of the pension obligation, expected to save a few million bucks a year going forward, will help as well. Let’s hope this is the worst of it.