The sales tax represents an increasing source of revenue for the City. Over the last ten years, sales tax collections increased 80 percent. During the same period, sales tax receipts have also increased as a percentage of the general fund. In other words, the sales tax has been paying for a greater share of the City's operating expenses. Although sales tax receipts have steadily increased over the last ten years, collections are volatile since they are directly related to the well-being of the local economy.
Unanticipated events can turn the economy around overnight.
Currently, all indications imply a slowing, but healthy economy. As explained in the Economic Outlook, the national economy has been experiencing a slowdown. Higher inventories of unsold goods, reduced consumer spending due to higher credit card debt, and higher interest rates have had impacts on the local economy. All major Texas cities have felt the effects of this slowdown in their respective sales tax revenue. Though less than projected for the current year, Austin sales tax growth remains among the strongest in the State.