Payson straggled through another year of flat sales and flat revenues, but can take comfort from signs of life in the once vital, long moribund construction industry, according to a quarterly financial report presented to the council on Thursday.
New construction once propped up the town’s budget and brought in millions in impact fees to fund the Blue Ridge pipeline, but all but shut down three years ago.
Since then, construction-related permits have inched forward. Building permit revenue totaled $117,000 in 2010, then rose to $125,000 in 2011. By June of 2012, the total had risen to $221,000 — up 34 percent from three years ago.
That’s still not much compared to the glory days of 2007, when the town building department approved about 300 new permits — but it’s progress.
Most other sources of town revenue barely held steady — or fallen significantly, according to the year-end quarterly analysis of the three months ending in June, presented at the Sept. 6 town council meeting.
The town ended the year right on its gloomy target — with a year-end balance of about $245,000.
In substantial measure, taxpayers can thank a slew of vacancies in the police department for the soft landing fiscally. The department remains about five positions below budget as a result of a combination of factors, including three resignations and firings. Although it’s been recruiting, the department hasn’t managed to fill any of the vacant slots. Fortunately, the crime rate continues to drift downward despite having about 20 percent fewer officers than the department had budgeted.
Finance Manager Hope Cribb compared expenditures to budgets, trying to pinpoint which departments have kept the tightest leash on spending. She noted that the general fund came in 86 percent below budget, the HURF-based streets and engineering about 88 percent below budget, the library 94 percent below budget and the water department at about 114 percent of budget.
The big surge in costs for the water department related to the cost of repairing pumps, rising vehicle maintenance and a payout for an employee. Town employees can accumulate substantial amounts of sick leave and unpaid vacation days, resulting in big departing payouts for many longtime employees.
Cribb concluded that overall “a large proportion of the ‘savings’ is due to the vacancies in the police department, having only one election (because no one ran against the incumbents) and Information Technology’s reduced expenditures on equipment.”
The report shows the town stuck in a stubborn downturn, with a third year of flat sales tax revenue — the mainstay of the town’s budget.
Back in 2010, the town collected $5.8 million in local sales tax and $1.1 million state-shared sales taxes. In 2012, the town again collected $5.8 million in local sales tax and a barely improved $1.2 million in state-shared sales tax.
And that’s the good news — more or less.
Most other sources of revenue dwindled this year.
State-shared income tax went from $2 million in 2010 to $1.3 million this year.
Property taxes went from $773,000 in 2010 to $702,000 this year.
Highway user’s taxes went from $1.4 million to $1.2 million as the state diverted money to the highway patrol and others.
Even vehicle license taxes — mostly from the sale of new cars — went from $863,000 to $833,000.
Granted, money from the bed tax climbed from $136,000 to $220,000. That sounds like great news for the mainstay tourism industry — but much of that increase stems from an increase in the rate. The town promised the grumbling hotel managers it would spend that extra money on promoting tourism — but the tourism and promotions budget hasn’t changed much since the rate increase took effect.
The town also raised recreation fees as it cut the recreation budget and curtailed activities. Money collected in recreation fees went from $164,000 in 2010 to $198,000 in 2012.
The town’s separately budgeted water department did report a big increase in spending, but that mostly had to do with costs related to the Blue Ridge pipeline and a couple of major pump repairs. The water department budget went from $3.4 million to $4 million, which also reflects a substantial water rate increase.
The water department remains the source of some concern, given the start of construction on the Blue Ridge pipeline.
The town council on Thursday voted to accept a $6.2 million federal loan to build the $34 million pipeline, which will double the town’s water supply. The loan is part of the $10.5 million bundle of grants and financing the town landed several years ago to help finance the project.
Originally, town managers assured residents that a $7,500-per-unit impact fee on new construction would cover the costs of the pipeline. However, the collapse of the building industry left the town scrambling for the revenue needed to obtain the low-cost federal financing for the pipeline. The council imposed a roughly 25 percent water rate increase to make sure it has the revenue stream necessary to float the bonds, regardless of whether it collects impact fees to offset those costs in the future.
Town officials say they may need another round of water rate increases as construction continues, depending on whether impact fees start rolling in as the economy recovers. That includes a possible university campus. The Rim Country Educational Alliance SLE has already agreed to pay some $7 million in impact fees if the campus comes to pass.