Payson got rare good economic news this month, with a rebound in sales taxes and a surprise, year-end surplus of more than $1.1 million.
The fiscal-year-end figures from the state showed that after taking a scary dive in mid-April, sales rebounded in late May and June. Although local sales tax revenue came in 12 percent lower than last year — Payson finished the year down just 1 percent from the projections made in October.
In the meantime, belt tightening across the board and the discovery of money mistakenly stashed in a reserve account boosted the year-end balance from the projected $370,000 to about $1.1 million.
Payson Mayor Kenny Evans said, “We’re through the worst of it, we’re seeing our fundamental underlying strength. But we face a very uncertain road, with both the state and federal governments.”
The year-end financial report came as a substantial relief, since the last update two months ago featured an abrupt and unexpected plunge in sales tax revenue.
Up until that report, economic activity in Payson had been shuffling along, only a little behind last year’s totals before the national recession set in.
In mid-April, sales actually caught up to last year’s level — followed by the sudden plunge.
In fact, local sales taxes collected in April were just $8,219 behind last year’s levels — the lowest for the year. Followed immediately by May — where levels fell $182,000 behind last year — the worst performance of the year.
The turnaround in May and June could cover some risks the council took in adopting the budget for the fiscal year starting in July. The council’s budget relied on loans from the water department to create a precarious $600,000 reserve fund. But the extra $750,000 in the bank at the end of the last fiscal year should give the town a welcome additional financial cushion.
Even so, the town’s operating budget remains nearly one-third below its peak level before the recession. A hiring and salary freeze coupled with a cancellation of most major road building and maintenance accounts for the bulk of the savings.
“We’re still hanging on by our fingers,” said Evans of the accumulated cuts over the past two years.
Evans credited the town’s aggressive lineup of new special events and promotions from preventing the steep dropoff in business reported in many other communities.
“Given the amount of energy and effort we’ve put into events” like the Sawdust Festival, Civil War Re-enactment, and July 4 celebrations “we should have seen a 15 or 18 percent jump. Instead, what we were able to do was to hold our own. We’re doing much better than our colleagues, but it’s still a tough economic time.”
The year-end fiscal report shows that the town spent $24 million in fiscal 2008-09 —about $783,000 more than it took in. When the fiscal year started a year ago, the budget called for $36 million in spending, which the council cut by one-third back in October.
Facing a roughly 22 percent decline in revenue from the estimates at the start of the year, the town responded with almost across the board budget cuts, which fell hardest on departments like parks and softest on departments like police, fire and the town attorney.
Fortunately, Town Manager Debra Galbraith discovered nearly $1 million that had been placed in two different reserve funds, without any documentation for why the money had been set aside. She then shifted that money into regular accounts, including $586,000 that went into the general fund and $500,000 that went into the gas tax funded road building fund known as HURF.
Nearly every department ended the year below even the shrunken budgets imposed in October, shrinking the general fund budget to $12.9 million.
Information technology came in $65,000 under budget, a reduction of 12 percent.
Departments coming in 3 percent to 6 percent under budget included financial services, human resources, attorney, tourism and police and parks.
The police department saved $203,000 by coming in 4.4 percent under budget.
However, that didn’t quite offset the $255,000 over-budget performance in “central services” — which was 32 percent above the adopted budget of $1 million.
The only other department that went over budget was the town council, which spent $124,000 — about $6,000 over budget.