Payson’s just adopted budget calls for a 5% overall jump in spending, despite predictions the pandemic shutdown would crimp crucial sales tax revenue.
In fact, the budget for 2020-21 envisions only a minor drop in sales tax, more than offset by millions in grants — including $1.8 million from the federal CARES Act.
The $43 million budget features sizable salary increases for police and fire and plenty of money to boost capital projects without depleting reserves. The budget includes millions of dollars in grants the town won’t actually spend unless the grants come through.
The council unanimously agreed to adopt a budget during its July 9 meeting that increases general fund spending by 8% over last year’s adopted budget. The general fund pays for most day-to-day town functions except the water department.
The town has worked in a cushion in case the pandemic cuts into revenues more than expected. In fact, each year, the town routinely spends less than budgeted. In the current fiscal year that ended June 30, the town budgeted $40 million, but spent only $33.6 million — which includes grants not actually received. By statute, the town can’t spend more than it approves to spend in its budget. If the town receives a grant in the middle of a budget cycle, it cannot spend that money if it didn’t approve spending that money in the budget.
The town’s property tax rate will actually decline, thanks to a rise in assessed values. Property taxes will bring in about $841,000.
One surprise for the upcoming year’s budget — sales tax.
Sales tax receipts are the bedrock of town revenues. So far, they have not declined as expected. For the upcoming year, the finance department estimated sales tax revenues to drop a modest $200,000 from last year. This represents a much better estimate from when the pandemic first hit. In March, the town feared it would lose up to $3 million.
State and federal grants provided a comfortable cushion. The town received the $1.8 million CARES Act stimulus, which it didn’t spend this year and carried forward into the just adopted budget. Other anticipated grants include an extra $1 million in gas tax money for roads and $1 million from the federal government for the airport. The town also expects an extra $100,000 in federal payments for sending firefighters to fight wildfires.
So, the budget envisions a roughly $100,000 drop in general fund revenue, which includes sales taxes and fees but a $4.5 million increase in other revenue, mostly grants. The special funds revenue will rise from $6 million to $10.5 million.
The bed tax is projected to increase slightly.
Overall, the town expects revenues to increase by 5%.
Of interest, the council contingency fund swelled to $1.3 million, up from its budget of $1 million last year. Because of the pandemic spending freeze, the council only spent $200,000.
The council contingency fund acts as the slush fund for the town. Last year, the council voted to fund the splash pad out of its contingency fund. Other expenditures included completing the light upgrade plan for Main Street.
The water department dropped its estimate for what it would spend by 7% from last year’s adopted budget. The water department has its own fund, which isn’t part of the general fund. This year, the water department budgeted $10.8 million but spent only $8.8 million. Next year, the budget calls for spending $10 million. Recently, the water department explored increasing water rates to pay for needed upgrades to main pipelines. Pressure from constituents caused the council to delay the process to increase rates.
The council boosted police and fire salaries this year with the adoption of a new steps schedule. The council adjusted the salary schedule adopted last year after hiring a consultant. Fire and police staff suggested another increase to take into account years of service. The council agreed with their request.
Overall, the adopted $7.6 million police budget is 10% larger than this year’s adopted budget and a full 20% larger than the department actually spent this year.
The fire department enjoyed a similar bounty. The 2020-21 $5.9 million fire department budget would increase by 23% over this year’s adopted budget and 28% over the actual budget spent.
The council hoped future revenues remained steady. A steep decline would threaten jobs, they said.
Overall, the town expects to increase spending by 5%.