HomeMy WebLinkAboutIR 7584 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7584
March 3, 1992
C*WTEft,
To the Mayor and Members of the City Council
Subject: REPEAL OF CITY'S ONE PERCENT SALES TAX EXEMPTION ON
' EkI—ENTIAL UTILITY
It is recommended that the City Council repeal the one percent sales tax
exemption on residential gas and electricity usage. Repealing the sales tax
exemption on residential customers of TU Electric and Lone Star Gas would
generate approximately $2.1 million annually in new revenue for the City of
Fort Worth. The impact of the one percent sales tax on the average consumer
of both utility services would be less than $1.25 per month.
In 1978, an act was passed by the Texas Legislature which repealed the four
percent State sales tax on residential gas and electric bills. This act also
permitted the exemption of the local sales tax on these same utilities on a
local option basis. In September of 1978, the Fort Worth City Council voted
unanimously to follow the State and repeal the City's one percent sales tax
on. residential utilities, reducing sales tax revenues by $616,896. The act
provided that the municipalities could re-impose the tax at any time by
adoption of an ordinance repealing the exemption. If the exemption were
repealed, the tax would be effective the first day of the quarter following
the date of the City Council 's action.
Most cities in our immediate area currently levy this tax including Dallas,
Arlington, Hurst, Euless, Bedford, North Richland Hills, Richland Hills,
Burleson, Cleburne, Lake Worth, Mansfield, Everman, Grand Prairie, Grapevine,
Keller, Colleyville, Crowley, Lewisville, Haltom City and River Oaks. Other
cities around the state collecting the one percent City sales tax on
residential utilities are: Abilene, Amarillo, Austin, Beaumont, Corpus
Christi, Galveston, Houston, Lubbock, Waco, and Weatherford. Cities who do
not collect a one percent local sales tax on residential utilities include
Benbrook, Denton, Forest Hill , Garland, Irving, El Paso and San Antonio.
According to TU Electric, 1991 revenues from residential accounts totalled
$170,205,353. In the same period Lone Star Gas received $42,631,000 in
revenue from residential natural gas sales. If a one percent sales tax were
levied, the City would receive approximately $2,128,364 in new revenue. The
average annual electrical bill in Fort Worth is $1,006, while the average
bill for gas is $444. For citizens with electrical service only, the tax
would increase annual bills $10.06 or $0.84 per month. For citizens with
both electrical and gas service, the annual increase would be $14.49 or $1.21
per month.
The staff recommends that the City Council adopt an ordinance repealing the
residential sales tax exemption prior to March 31, 1992, so that the City may
begin receiving additional sales tax revenue in the third quarter of the
1991-92 fiscal year. The City staff will provide any additional information
desired.
DD ID IVORY
ID IVORY
CITY MANAGER
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS