Payson’s fledgling economic recovery has apparently faltered, perhaps brewing more trouble for Payson’s battered finances.
The town of Payson’s monthly finance report shows a worrisome drop in retail sales for the month of September, after sales in August had nearly made up all the lost ground from last year.
“I was surprised,” said Payson’s Chief Financial Officer Cindy Smith. “I didn’t expect it.”
Moreover, town spending is running some $315,000 ahead of projections while revenues have lagged about $349,000 behind, eating into the beginning fund balance.
Still, the town hasn’t had to dip into a $1 million contingency fund created by effectively borrowing money from the town’s water fund.
All of that worrisome news comes even before the town has had a chance to calculate the likely impact of the latest state budget proposals. The Arizona Legislature proposed hundreds of millions in cuts and Gov. Jan Brewer has added substantial additional reductions intended to close a projected $1.5 billion deficit between now and the end of the fiscal year in June.
Still, Payson is holding its own for the moment — although a continued slide in sales tax could create new problems, said Smith.
“If the trend continues, we’d be in trouble,” said Smith. “And I’m sure we’ll feel an impact from the state budget. But we’re in the process now of looking at the data. I don’t believe we’re spending more than we’ve budgeted for.”
Perhaps the single most alarming numbers came in the form of a sharp downturn in sales tax receipts, the largest single source of town revenue. So far, local sales tax receipts for the year are just over $2 million, about $307,000 less than the budget projected.
The sales tax numbers in the November report released Tuesday actually reflect sales made in September.
The drop in September snuffed out the first signs of a recovery that glimmered in the October report — which reflected sales in August. Those numbers had actually come in a little above last year at the same time, the first time that had happened all year long. However, in September the sales plunged, dropping from August’s $541,606 to $427,186. Last year September sales tax receipts totaled $557,000.
All told, local sales tax receipts have declined by 15 percent from last year.
The breakdown of sales tax receipts by category revealed some surprising winners and losers.
For instance, general retail sales dropped a modest 6 percent to about $1.3 million. And the previously hard hit real estate sector dropped just 8 percent, to $113,000.
On the other hand, construction remains moribund with a dismaying 54 percent drop to $172,000.
Hotels reported a bad month, with a 19 percent drop to $94,000, despite a wealth of weekend activities in August including the rodeo. On the other hand, restaurants and bars dropped just 3 percent to $224,000 and arts and entertainment were essentially unchanged at $24,000.
Those figures suggest the residents and visitors may be buying enough meals in restaurants to keep local eateries afloat, despite a drop in overnight visitors.
Local business advocates have been pushing tenaciously for months to convince residents to spend their money in the Rim Country, instead of heading down the hill to the Valley —especially as Christmas approached.
John Stanton, manager for the Rim Country Regional Chamber of Commerce, said “We’re trying to get people to stay in town when they shop — be loyal, buy local.”
He said the chamber did a survey in August and found 143 empty storefronts in town. As of October, the town had lost a total of 24 businesses for the year.
However, in recent months he said a number of new stores have opened their doors, including the 260 Café, the Oasis Hair Salon, Loot, the Sock Room, Black and Tan, Simon Med Imaging and Mike’s Custom Auto Body.
Stanton said, “I don’t think we’re getting worse anymore — but if it’s a long hard winter, that’s going to be tough. Everyone’s talking about the potential of Arizona State University coming to town, but I’m also greatly concerned about the loss of funding for Tonto Natural Bridge. If we can’t work this out, it’s going to be tough.”
The town budget could also face some tough, short-term adjustments, if sales tax figures continue to dwindle through the fall.
Smith said in January she would analyze tax and spending trends and estimate the likely impact of the latest version of the state budget.
“I’m watching it closely,” she said, “we’re taking a hard look at what the state is doing and how that’s likely to affect us at the local level.
So far this year, the town in its general fund has spent nearly $800,000 more than it has taken in. As a result, the balance in the various general fund accounts has dwindled from $1.2 million to about $400,000 — not counting the $1 million the reserve fund from the water department loan.
Most of the town’s departments are spending a little more than the budget called for at this point in the year.
For instance, the fire department has so far spent $1 million, about 7 percent ahead of the estimate to this point in the year.
The police department has so far spent $1.5 million, about 5 percent ahead of the budget to date.
The town attorney’s office has spent $181,000, about 8 percent ahead of projections.
The public works department, which now includes maintenance in the parks, has spent $280,000, some 37 percent ahead of projections. This could represent major projects completed sooner than expected, she said.
Parks and recreation is right on budget at about $155,000 for the year to date.
The Community Development Department, which has processed just 27 permits for single family homes this year, has spent $290,000, about 3 percent ahead of projections.