Orange deals with income losses

The city of Orange is down $2 million in sales tax revenues through the first eight months of the year, adding to another deficit because of industrial loses.

The Texas Comptrollers Office reports that the city collected $596,552 for August, a decrease of 21.1 percent from August of 2023, plus the city had collected $6 million for calendar 2024, compared to $8 million for the same period in 2023.

The sales tax income is used as part of the city's general fund that pays for general operations like employee salaries and benefits, fire and police protection, along with parks, the library, and road repairs. The water and sewer department is a revenue fund, meaning it is paid for with income from the fees charged for water and sewer services.

Other separate funds include economic development, financed by a half cent per dollar sales tax approved by voters, and the hotel occupancy tax, paid by people who rent hotel rooms in the city. State law restricts the uses of those incomes.

The city's general fund also uses property taxes and payments from industries through Industrial District Contracts, or IDCs. The IDCs are negotiated between the city and industries within the city's extraterritorial jurisdiction. The payments are negotiated to be a percentage of what the industrial plant would pay in full taxes if the plant was within the city limits. In return, the city agrees not to annex the industrial plant. The agreements have been common since the 1950s.

Orange City Manager Mike Kunst said last year the Invista plant was to be closed. The Invista plant was part of the original 1947 DuPont fibers plant that was bought by Koch Industries 22 years ago. The plant is on FM 1006, known locally as Chemical Row.

Also, International Paper closed the 1967 paper mill north of Orange that was built as by Owens-Illinois and went through several owners.

Both those plants had IDCs with the city and the city expected to lose $2 million from the general fund because of those closings.

However, in October, Invista announced it was going to open back up part of its plant. Kunst said the calculations haven't been made yet on how much income that could bring in for the city.

The opening would also benefit the county and the West Orange-Cove school district.

The sales tax revenues are reported by the comptroller's office by calendar year, and the city operates on a budget year that runs October 1 through September 30 each year. Public entities with similar fiscal year dates begin working on their new budgets during summers with elected officials giving approvals to the budgets in September.

Kunst said the city could see the trend in the dropping sales taxes and knew of the decline of the income from the two plant closings. All city departments were asked to cut their budgets 10 percent to help make up for the losses; so Kunst does not see any financial problems for the city in the next months.