By The Numbers: Grocery Tax Confusion Leads To Oklahoma City Budget Shortfall

The Oklahoma City budget is short $1.4 million in sales tax revenue, which could affect its ability to hire employees. The City Manager said the decline is likely due to confusion about the passing of a grocery sales tax exemption which took effect in August. 

$1.4 Million: The Budget Shortfall

“We've continued to see a decline in sales tax throughout the year,” said City Manager Craig Freeman. “We think it's still going to improve in the second half of the year, but it's not likely to make up how much we've declined in the first part of the year.” 

Freeman elaborated, “There were several major vendors that got confused on this and didn't charge the full sales tax on grocery. A lot of those were identified quickly, but still as much business as they do, it had an effect.” 

6%: Decline in November

The City Budget Director shared, “We've had about five sales tax checks come in that were lower than what we projected." 

Freeman said the city projected 2% growth for the year, but November has brought a 6% decline.

$8 Million: The Amount The City is Trying to Avoid

Freeman explained, “That's likely to be really difficult to overcome in the second half of the year. If the trend continues, we expect to maybe end the year at about $8 million under our budget.” 

Why does this matter? 

The city considered a hiring freeze as a potential solution. 

"So much of our budget is based on positions and jobs that if we can help create more vacancies going into a budget like that, we can create opportunities where we can reduce the budget without affecting someone's job." 

What’s next? 

The city said it has strong reserves to weather the storm, and it will work to create opportunities to reduce the budget without cutting jobs.