Years of steady growth in sales tax revenue has halted and even reversed direction in many Denton area cities this year, a Denton Record-Chronicle analysis has found.

Overall, sales tax allocations have been flat since the first half of 2009 for many cities, in large part caused by a drop in retail sales.

For some cities, the sales tax revenue stream has receded to 2007 levels or earlier.

Among 15 Denton area cities, payments reported by the state comptroller’s office in April, May and June dipped nearly 11 percent compared to the same period last year. Denton’s share dipped 4 percent — more than $200,000 — compared to last year.

For the Denton County Transportation Authority, which is highly dependent upon sales tax revenue from its member cities of Denton, Highland Village and Lewisville, the reduction in tax revenue — about 2 percent — has not yet triggered required budget cuts, finance director Anna Mosqueda told the DCTA board last month.

But should the downward slide continue, DCTA spokeswoman Dee Leggett said, the agency would cut travel and other administrative items before it considered cutting services.

The backward slide follows more than a decade of steady growth in sales tax allocations, with some Denton area cities going from negligible earnings, to five and even six figures per month.

Hickory Creek’s sales tax revenue skyrocketed from less than $90,000 in 2000 to more than $1.3 million in 2008. Residents there recently agreed to a quarter-cent increase in the sales tax rate in exchange for a property tax break.

While Hickory Creek’s earnings for the first half of 2009 has been nearly the same as 2008, the state comptroller’s checks to neighboring Lake Cities have been shrinking for the same time period. Revenue slid more than 3 percent in Corinth, 5 percent in Lake Dallas and nearly 17 percent in Shady Shores.

Jim Berzina, Corinth’s interim city manager, said that since the beginning of the fiscal year, the city has seen a 14 percent to 15 percent drop in revenue from what they expected.

The city had initially planned for a small increase in sales tax revenue, but that didn’t happen. In addition, interest earnings and other revenue fell short of projections.

“It was about a $1 million swing on a $12 million budget,” Berzina said.

Sales tax-dependent programs such as economic development, crime control and street repair have some cushion from the good times, so those programs are fine for now, he said. In addition, the city staff sought savings in several places, he said, so they haven’t had to lay anyone off.

He’s been encouraged by an overall uptick in revenue the past two months, he said, but stopped short of calling it a trend.

“Two months does not a cake bake,” Berzina said.

Sanger remains on high ground, pulling in nearly $80,000 per month in sales tax revenue.

City Manager Mike Brice said he thought his city’s retailers may be more recession-proof than others, and that’s why revenue is trending the other way.

“People are shopping at the local grocery and the dollar store,” Brice said. “Instead of driving to Denton to shop for a couple of hours, or to eat out, they are eating here.”

Overall, Sanger’s revenue is up 14 percent for the first half of 2009, compared to the same period last year.

“We’re better off than most folks,” Brice said.

Tony Puente, a revenue analyst for the city of Denton, said the finance department regularly reviews the confidential report that comes from the state comptroller’s office with the monthly payment. They combine that information with historical information and other data, such as property tax delinquencies and foreclosure rates, to try to make some revenue predictions.

Puente said that predicting sales tax revenue is complicated, especially as unsteady as the market is right now.

“Some of what’s happening right now is unprecedented,” Puente said.

The city’s top sales tax payers seem to be about the same as last year. But some of the smaller taxpayers — perhaps the mom-and-pop stores, Puente said — are reporting a lot less.

He can’t make generalizations about why that could be, he said, since there are many possible reasons for it. Neither the city nor the comptroller’s office would receive information.

But when last month’s allocation came in 8 percent less than last year, Puente made a call to one of the city’s larger “use tax” payers.

“I just asked them, ‘What’s going on?’” Puente said.

They told him they were paring down on manufacturing inventory, which lowers that tax bill. They also told him that they weren’t returning to the higher inventory levels for a couple of months, Puente said.

His probe for information wasn’t meant to be scientific, Puente said, but could help him make a better forecast for city managers.

“It’s like trying to predict the direction the wind blows,” Puente said. “We’re somewhat cautious about saying that the sky is falling.”

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com.