City Manager: Sales-tax receipts fall short of budget; city to start budget workshops Aug. 4

City Manager Mr. Atkinson told the Lubbock City Council on the start of its July meeting that the city’s sales-tax receipts through May are below the fiscal‑year budget and that staff is adjusting the General Fund to stay balanced.

The update said forecasted receipts now total about $100,664,000 against a budgeted $105,600,000 in sales tax — roughly $5 million below the adopted budget and about $313,000 below the council’s most recent projection for the months reported. Atkinson said collections are close to the prior year but not rising above it as the adopted budget assumed. "We were still about $313,000 shy of the budget projections or just under 4%," he said.

Atkinson told the council the city has identified expense reductions and other offsets to preserve a balanced General Fund through the rest of FY25. Staff has eliminated five full‑time non‑public‑safety positions, implemented a hiring freeze, reduced directors’ submitted budgets (resulting in about $2.1 million in savings), and is pursuing anticipated savings in health plan and workers’ compensation costs. Multiyear contractual obligations — including the police department’s Axon video system and computer‑aided dispatch contracts — will be honored and are not subject to the budget reductions.

Atkinson said interest income has been an unexpected positive: with higher interest rates the city expects about $3 million in additional general‑fund revenue tied to investment earnings, and he cautioned that the dollar amounts and certified property values could change when appraisal values are finalized next week. He said preliminary taxable value of new property for maintenance & operations (M&O) purposes from the Lubbock Central Appraisal District showed about $2.1 million in new value, down about 25% from two years earlier. "With $2.1 million in new property and about $2 million less predicted for sales tax, you see that your net is about $100,000," Atkinson said.

Atkinson reminded council that budget workshops for fiscal year 2026 begin Monday, Aug. 4, and that staff will continue to prioritize public safety while pursuing savings elsewhere and deferring or flattening capital projects where delay will not increase long‑term costs. He said fleet replacements for solid waste and public safety remain among the largest capital needs.

The presentation also noted statewide patterns: the Texas Comptroller’s monthly release cited gains in construction and electronic shopping but weakness in furniture, home improvement, and hotel occupancy taxes; Lubbock’s hotel‑occupancy tax is tracking about 5% below the prior year, similar to the statewide figure. Atkinson said those statewide sector patterns matched local receipts. No formal council action was taken on the sales‑tax presentation; it was received as an informational briefing.