Retail sales plunged in Payson in April, upending the town’s budget planning process and raising the ominous possibility the recession could deepen rather than ease.
The town’s May budget tracking report indicated a $150,000 drop in revenues — including a 30 percent plunge in local sales tax revenue, which is the worst drop in nearly eight months.
Town officials can’t account for the sudden drop — especially since sales in March had, for the first time in nearly a year, risen above the year previous. However, if the trend continues, it could turn a projected $600,000 surplus for the upcoming budget year into a $41,000 deficit, said Payson Mayor Kenny Evans.
The one bright spot in the budget picture for the moment lies in the ability of most town departments to stay well under budget so far for the year.
Local sales tax receipts reported in May fell to $355,000 — the worst month since last August. The sales that generated the taxes in the May report actually took place in April.
Evans said the $150,000 hit in a single bad month could dramatically affect the town’s budget for the upcoming year if it signals a new trend rather than a one-month fluke.
He said the sharp, one-month drop could turn a projected surplus of nearly $600,000 in the upcoming year starting in July into a $41,000 deficit — even with a planned $500,000 loan from the water department.
The $355,000 in local sales taxes collected in April compared to $477,000 in March.
Money collected from the vehicle license tax also dropped sharply in April, after having caught up in March. Building permit fees had actually risen above last year’s level in March for the first time since last July, but fell sharply in April as well.
The striking decline in sales taxes interrupted months of only modest declines. In fact, since last July, local sales tax revenue has been off by about 8 percent compared to the previous year.
“As best as we can estimate,” said Evans, “we would end up next year with a negative $41,000, instead of the $600,000 we were hoping to have — and that’s with the water department loan included.”
He said the town’s financial analysts still can’t isolate the reason for the big drop, since it couldn’t be explained mostly through a drop in a single category — like new car sales.
“A drop in big ticket items can’t explain away that $150,000 downturn.”
Most town sources of revenue have declined about 7 percent to 10 percent from last year. And until the April sales numbers came in, the local economy appeared to be making significant gains. The revenue remains close to the revised estimates that the council put in place in December with a flurry of layoffs, hiring freezes and canceled street improvements. Despite falling revenues, the town’s continued across-the-board penny-pinching has kept the budget in precarious balance.
Overall, the town remains nearly $700,000 under budget in its operating fund. The town’s various departments have spent a total of about $11.2 million to date.
That total does not include grants, capital improvements and the operations of the water department.
The monthly statement now provides detailed tracking of spending in each department, in contrast to a year ago when the town council unwittingly spent millions in reserves without getting a single monthly report.
The statement noted the percentage of budgeted money left in each department. With just 8 percent left in the year, any department with more than 8 percent of its budget to spend remains under budget. By that measure, the champion economizers were tourism, parks, information technology and human resources. However, the bulk of the overall savings came from the police department, which has spent $4.2 million so far this year — $200,000 below budget. The fire department has the next largest budget and remains right on budget at $2.4 million so far this year.
Only the $112,079 town council budget and the $201,000 magistrate court budget are so far running ahead of projections.
Cumulative decreases and increases for the year include:
State Sales Tax: Down 11 percent to $1.2 million.
Local Sales Tax: Down 8 percent to $5.2 million.
Revenue Sharing: Up 6 percent to $2.1 million.
Vehicle Tax: Down 7 percent to $59,000.
Building Permits: Down 24 percent to $171,330.
Gas Tax: Down 7 percent to $1.2 million.