Sales Taxes Rise, Building Permits Surge

Payson gets its first good budget news in months

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Please — let it continue.

That’s what Payson budget-scrunchers found themselves muttering as they crunched the September numbers showing a distinct uptick in the September sales tax figures.

After months of budget gloom, the $144,000 jump in local sales tax collections this fiscal year offered at least a quick gasp of relief.

The town collected $1.15 million in sales tax so far this fiscal year, a solid 14 percent more than in 2009-10 to this point. That brought local sales almost back to the 2006 level — the first such performance in months. Town officials greeted the figure with cautious relief, since the sales tax remains the town’s biggest source of income.

“We are close to the revenue received in 2006. It is estimated this growth trend will continue, however, it is impossible to predict how much growth will occur,” wrote Town Manager Debra Galbraith in her analysis accompanying the September budget status report.

Oddly enough, the state shared sales tax continued to decline by about $7,700 to roughly $375,000. The state collects the shared sales tax statewide, then distributes it to cities based on population. The figures could suggest that Rim Country may be emerging from the sale tax slump sooner than the rest of the state.

Other figures in the report also offered grounds for frail optimism, after a two-year decline that battered the town’s finances.

For instance, money from vehicle license taxes rose by $836 to $156,773 — the first increase in nearly a year. The money comes mostly from the sales tax people pay when they buy a new car at a local dealership.

“Does this mean that people are beginning to feel more comfortable with the economy and are making more vehicle purchases again?” queried Galbraith, “only time will tell.”

Even more encouraging, even long-moribund building permits revenues jumped — although the $8,449 increase was more like the surprising gasp of breath from a guy you thought was dead than a return to the days when Payson approved 200 building permits a year and collected millions in fees.

Building permit collections rose 30 percent to $36,810 and plan review fees rose by 14 percent to $10,844.

Those small, but precious gains in local revenue sources offset continued declines in some other major categories.

For instance, the local cut from the state-collected personal income tax dropped by $122,568 to about $375,000 during this fiscal year to date.

Typically, the state passes along the shared income tax money about two years after it’s collected. As a result, the town’s income tax revenue was the last to decline and will likely lag a year or two behind the return of economic growth.

The town also took a $10,702 hit in gas tax money collected by the state and redistributed to the cities. That money usually pays for street maintenance and road projects. Payson hasn’t undertaken any major road project in the past three years and has just barely resumed even routine street maintenance, like slapping on a coat of slurry seal. Such routine maintenance doubles a street’s life expectancy.

The uptick in sales taxes and building permits means the town may once more get away with a budget plan that left almost no margin for error.

Last year, the town barely straggled through the fiscal year with the help of a million-dollar loan from the water department, which had stockpiled a surplus for future water main improvements and money to build the Blue Ridge pipeline and connect it to the existing water system.

The council this year imposed a sharp increase in water rates — with more on the way. The council also imposed a somewhat porous hiring freeze and furloughed workers without pay for about two days a month. The town also sharply limited overtime, which hit the average pay of police officers and firefighters especially hard.

The year before that, the town basically balanced the budget with the entire rainy day fund stockpiled back during the building boom.

This year, the budget adopted in July must not only balance out, but begin repayment of the $1-million loan from the water department. The budget includes a whisper-thin contingency fund.

So the September numbers provide at least a gleam of hope that the region may have started its painfully slow climb out of the recession.

The rising revenues on paper seem matched by a rise in spending — with a number of departments spending already ahead of projections.

Galbraith said most of those high spending figures reflect one-time costs, which will average out as the year continues.

That includes an upfront payment of $24,000 to Arizona State Parks to help keep Tonto Natural Bridge open, money to underwrite various festivals and events, late payments from Gila County to support the library and other advanced payments.

Also, Galbraith said the town probably won’t spend about half of the money included in its on-paper budget — some $30 million put into the budget so that the town would have the legal authority to spend various grants and loans it has applied for, but probably won’t get.

That includes an $800,000 grant for the airport, $20 million in hoped-for federal stimulus grants to put a roof over the event center and rebuild two decaying streets, $900,000 in gas tax funds to rebuild a portion of Bonita Street, $6.2 million in property tax levees to build streets and water mains in the 200-acre Airport Land Exchange project, and $1.8 million in hoped-for federal water infrastructure grants.

“Keep in mind that (these projects) are still in limbo at this time. We are proceeding as if they will not occur,” said Galbraith.

The major town departments remain a little bit under budget.

For instance, the police department accounts for one in three dollars the town spends from the general fund and the fire department about one in five dollars the town spends. Both departments last year felt the weight of the cutbacks. Most police and fire officials suffered a 15-percent average reduction in pay, due to furloughs and overtime restrictions. The fire department shifted to two men on a truck for many shifts.

So far in the fiscal year that started in July, the police department is running about 10 percent below budget and the fire department about 8 percent below budget.

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