Payson’S Sales Tax Drops While State’S Rises

Arizona sales tax receipts jumped 8 percent in December, but Payson’s dropped by 14 percent

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Payson’s tax revenues swooned in December, despite a rise in sales tax figures statewide.

December’s 14-percent drop in sales tax receipts in Payson contrasts with a reported 8-percent rise statewide.

Overall, Payson wound up with 20 percent less money coming in than budget planners had projected back in June, which works out to about $1.3 million.

The latest bleak figures suggest Rim Country may lag behind the rest of the state in recovering from the long, debilitating recession, and might also mean the council will have to return to the bloody and depressing work of budget cutting.

The council held an emergency session in December to vote on nearly a million dollars in budget reductions, including a two-day-a-month furlough of town employees that amounts to a 12- to 15-percent pay cut.

The continuing downturn in sales tax revenue stands in perplexing contrast to a brightening picture statewide. The Arizona Department of Revenue reported December sales tax collections of $3.65 billion. That provided welcome relief after November’s 5-percent decline.

Statewide, analysts said the December sales figures provide the first indication in six months that the recession has bottomed out statewide.

The figures might reflect the seasonal impact of Christmas spending, which provides a much bigger boost for Phoenix and Tucson than for Payson.

In Phoenix, the economy benefits from an influx of winter residents and Christmas shoppers, while in Payson, many residents don’t visit second homes during the winter.

So even in normal times, Rim Country retailers don’t get nearly as big a Christmas boost. Up here, Christmas comes in July and June, so far as retailers are concerned.

Sales tax figures by category reveal some interesting winners and losers and offer glimmers of hope for the rest of the year — even though those numbers by categories reflect June-November sales — rather than the December figures captured by the summary data.

The bad news is that the once mighty construction sector remains in freefall — with a 50-percent drop from 2009’s shrunken numbers. The sales taxes from construction for the June to November period stood at $225,000, compared to $443,000 in the same period the year before.

Those figures were also reflected in the almost complete absence of building permit and plan review revenue for the town, a big source of revenue in the boom years.

The other big sales tax losers were hotels — down 18 percent to $116,000 and manufacturing, down 26 percent to $52,000.

Real estate took a hit, but less so — down 9 percent to $138,000.

All the other categories recorded only moderate declines for the June-November period. That includes a 7-percent decline for overall retail trade — down to $1.4 million.

Despite the big drop for hotels, the town’s restaurants and bars held their own — with a 3-percent decline to $271,000.

Sales taxes yielded by the arts and entertainment sector also held steady at about $30,000.

So it looks like people who stuck around for the winter have been keeping the bars and restaurants afloat, despite a decline in overnight visitors plunking down for a hotel room.

Payson’s budget woes could increase since the big drop in revenues is exacerbated by expenditures running a little ahead of projections for most departments.

The growing gap between revenue and expenditures has already prompted the town to call on a million-dollar loan from the water department to stave off a projected deficit.

So far, spending is running about $2 million ahead of projections, while revenues are lagging by about $1.2 million — resulting in a $600,000 deficit in the crucial general fund.

The cuts approved by the council last month should close the existing gap, but if tax revenue continues to lag, the council might face renewed cuts between now and June.

And all of that doesn’t even take into account the budget slaughter that would be triggered by voter rejection of the Home Rule measure on ballots expected to hit mailboxes next week.

If voters reject Home Rule provisions allowing the town to spend money above a state limit set in 1980, Payson wouldn’t have enough spending authority to keep police and fire operating at current levels, even if it shut down all other departments and canceled work on the Blue Ridge pipeline.

Several departments are spending ahead of budget projections, with half of the fiscal year gone.

Police department spending is running about $600,000 ahead of projections and the fire department is about $400,000 ahead of projections.

Together, police and fire have a budget of nearly $8 million and account for about half of all general fund spending, which excludes the water department.

The water department has a budget of about $6 million for general operating costs and another $2 million for costs related to the Blue Ridge pipeline. The department uses a combination of federal grants and accumulated water impact fees to pay the pipeline costs. So far, the water department has spent just $1.6 million, well behind projections.

Departments spending ahead of projections include the town council, financial services, elections, community development, tourism and parks and recreation.

The under-budget departments include information technology, the town manager, human resources and magistrate court.

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