Bracing itself for the start of budget deliberations, the Payson Town Council got some long-anticipated bad news last night -- a $5 million drop in revenue.
Projections now suggest that Payson will take in 16 percent less money than expected, thanks to a 15 percent drop in local sales taxes and a 49 percent drop in building permits.
Nonetheless, Town Manager Debra Galbraith predicted that the $25.5 million in revenue expected for the current year will rebound somewhat for the budget year that starts in July, when the town will take in a projected $28 million.
The presentation to the council at a budget work study meeting focused only on revenue projections. Galbraith will detail the already implemented cuts in spending for the current year and present budget options for the upcoming year at two additional budget study sessions in May.
But the revenue figures presented on Thursday offered a sobering glimpse of hard choices ahead and evidence that the Payson economy has already slowed -- as indicated by sales tax collections, housing starts and other sources of income. One of the few bright spots was a small rise in revenue from income taxes.
The drop in projected revenues hit the town across the board, including a $1.4 million drop in total taxes, a $694,000 drop in licenses and permits, an $800,000 drop in money received from other government agencies and a nearly $800,000 drop in charges for services.
Nonetheless, Galbraith predicted that revenues for the fiscal year starting in July will rebound by at least 9 percent over the current, shrunken bottom line.
All told, the 2008-2009 projections suggest that half the town's money will come from taxes -- mostly sales and income taxes. About 16 percent will come from other governments -- mostly state and federal. Licenses and permits account for 2 percent, charges for services 14 percent and all other sources about 17 percent.
Big shifts from the revenue projected when the current budget was adopted last July included:
- Local sales tax: down $1.1 million (15 percent).
- State sales tax: down $175,832 (11 percent).
- Income tax: up $101,000 (4 percent).
- Property tax: up $500,700 (1 percent).
- Hotel bed tax: down $61,800 (25 percent).
- Building permits: Down $196,000 (49 percent).