Killeen’s sales tax revenue increased 8.8% in the first five months of 2022.
Year-to-date, the city has received about $13.8 million, about $1.1 million more than it was allocated in the first five months of 2021, when it had received $12.7 million.
However, growth has slowed since 2021, when it received 2.2 million, or 21%, more than in 2020.
Despite slower growth, Killeen’s sales tax revenue growth has significantly exceeded City Manager Kent Cagle’s forecast sales tax growth of 1.5% in fiscal year 2022.
This is good news for Killeen – sales tax revenue makes up over 30% of the general budget, which pays for things like police, public works and more. The bad news is that the sales tax boom is at least partially attributable to inflation.
A Texas Comptroller’s Office analysis authored by Spencer Grubbs showed that Texas’ inflation rate hit 9%, up from an inflation rate of around 3% in April 2021.
The headline inflation rate is based on household spending habits in areas such as food purchases, energy and travel and is released bimonthly by the Bureau of Labor Statistics. According to the Bureau, the price of common food items like meat and eggs has risen 14.3% since April 2021. Gas, meanwhile, has soared more than 30%, due at least in part. a Russian oil embargo and inconsistent crude oil demand. oil supply. Along the same lines, housing prices have increased exponentially over the same period.
This means that while the city will have more money for programming, residents will get less and less for their money unless inflation is brought under control.
The ruler in
To address what has been the fastest increase in the federal inflation rate since the 1980s, the Fed has raised the federal funds rate by 0.75% since the start of this year. When the COVID-19 pandemic hit, the Fed saw a cut in the federal interest rate to an effective federal funds rate of 0.05% – with the hope that increased borrowing authority would ease the pressure on residents and would keep economic growth afloat.
With tighter fiscal policy heading into 2022, the Fed is trying to rein in a booming economy by effectively dousing it with cold water. With clear indications – and more than a little luck – the Fed hopes to bring the inflation rate back to a target of 2%.
However, tighter fiscal policy will likely be reflected in consumer wallets in the form of higher borrowing rates, translating into higher overall interest payments on credit card debt and loans.
So while Killeen may enjoy a boost in city programming, residents can expect higher prices at the store and at the pump for at least another few months.