City budget staff told Columbia City Council members that sales and use tax together remain the single largest revenue source for the general fund, that use tax receipts have been unusually variable, and that the city has reallocated a portion of the public improvement sales tax back to the general fund for FY26 to narrow the budget gap.

Lede facts and forecasts
Staff said sales tax and use tax together make up roughly 30% to 38% of general fund revenue, and overall sales-tax growth for the city is forecast at about 1 percent for FY26. "Overall though, it's about a 1% increase for sales tax is what we're forecasting," said DeCarlin, a staff presenter.

Use tax unpredictability
Budget staff described use tax as particularly unpredictable: "there's really no rhyme or reason for the way use tax comes in, so it makes it very unpredictable," Lou said. Staff reported that use tax collections have come in above budgeted expectations in the current year and are offsetting some of a sales-tax shortfall.

Marijuana and other local taxes
Staff also discussed the city's marijuana excise tax and said its collections have fluctuated; staff said they had re-estimated marijuana tax revenue downward after a large one-month jump that proved nonrecurring. "We re-estimated... Now we are forecasting around $600,000 for the upcoming budget," a staff presenter said. The city treats marijuana receipts differently from general sales tax in accounting and can spend marijuana revenue more flexibly, staff said.

Public improvement sales tax transfer
To help balance the FY26 general fund, staff said the council is temporarily pulling back a portion of the public improvement sales tax that had previously been allocated to a separate public improvement fund. Staff explained that 0.2 percentage point of the one-percent sales tax (commonly referenced as 2% of the city's 1% allocation to public improvements) will be included in the general fund for FY26; staff told council the decision will be reviewed on a year-by-year basis for FY27. "Instead of setting funds aside in a public improvements fund, we actually put that back into the general fund," Lou said.

Why it matters
Sales, use and excise taxes together fund a large share of local government operations. Changes in these revenue lines — especially when reassigning funds from a capital or improvement fund to the general fund — affect the city's ability to pay for maintenance, capital projects and ongoing services.

Council follow-up
Council members asked that staff present, on Saturday and in later sessions, examples of projects previously paid from the public improvement fund and a five-year picture of sales, use and marijuana taxes so council can weigh the trade-offs of the temporary transfer back into the general fund.

Staff cautioned that most forecasting vendors supply county- or national-level data that may not perfectly match local collection patterns and that receipts can swing on events such as weather, home-game schedules and other local factors.