Payson’s tax revenues have lagged behind even this year’s pessimistic budget assumptions and may force a fresh round of cuts, according to the town’s first quarterly financial update in years.
The austerity budget adopted this year had assumed sales tax receipts would rise from last year’s $6.7 million to about $7 million — with modest additional increases in taxes on hotel rooms and new construction.
Instead, projects for the first two months of the year show that most tax revenues are running behind last year’s weak performance, said Finance Director Doug Hill.
Hill had promised the council regular updates this year. Last year, the council got no financial updates and was surprised near the end of the year when falling tax collections wiped out the town’s financial reserves. The council canceled most street improvements and imposed a hiring freeze in response.
Hill will present the first of those promised updates at Thursday’s council meeting.
The tables in the report at first glance seem to show tax revenues and building permit fees running ahead of projections, however, that’s just because of the way in which projections were averaged over 12 months. In fact, the increases in the busy summer season just past fell behind last year’s numbers.
Overall, the figures show revenues $64,000 behind projections for the first two months of the fiscal year — but that modest shortfall understates the potential problem, said Hall.
The month to month projections suggest sales tax revenues could wind up below the $6.7 million collected in fiscal 2007-08, which could force the council to make hundreds of thousands of dollars in additional cuts to balance the budget before the end of the current fiscal year.
And that doesn't take into account the possibility the economy will slide further.
“It’s very hard to tell which way the budget is going,” said Hill, “but we have a problem and we have to deal with that.”
The budget had assumed sales tax receipts would increase by $300,000.
“Obviously, that’s looking like a bad assumption at this point.”
The one bright spot in the revenue picture remains the increase in the town’s share of income tax revenue. For the first two months income tax revenue came in at $577,000 — nearly $200,000 ahead of projections. The budget projects $2.2 million in income taxes for the year.
Spending has remained under budget so far, cushioning the impact of the lagging tax revenues, city officials said.
So far, the $1 million spent by the police department is about $120,000 behind projections and the $617,000 spent by the fire department is $50,000 behind projections. Other departments running behind projections on spending include the town manager, courts, town attorney, planning, parks and recreation and health and welfare.
Departments so far spending more than they’d budgeted include engineering, the council, information services, the clerk’s office and general government.