Revenue down, so city tightens belt

Sales tax revenue is not hitting projections in Kingman, according to current budget figures compiled by City Financial Services Director Coral Loyd, and the city is tightening its belt accordingly.

The city missed the revenue goal set for the first quarter of the 2008 fiscal year by 3.49 percent. Loyd said this mirrors the slowing nationwide economy and is not occurring because of the implementation of development impact fees.

"If you look at the number of homes for sale," Loyd said, "you'd have to say that (impact fees) are not affecting (local sales tax revenue.) Impact fees don't necessarily encourage home construction, but they're not the sole cause (of the decline).

"Even if there were no impact fees, there would still be a decline in the revenue due to the overall economy nationwide."

The city's 2 percent sales tax is a primary source of revenue for the general fund. That fund provides money for city programs, employee salaries and core city services.

The city budgeted $15.2 million in sales tax revenue for the 2008 fiscal year, which began July 1. So far, the city has received a little more than $3.2 million in revenue, or about 21.5 percent of the total budget. At the end of any given quarter of the fiscal year, the city expects to take in 25 percent of the year's budget.

Loyd, along with Acting City Manager Jack Kramer, said the city is already putting cost saving measures into effect. A hiring freeze is being imposed on city departments, particularly those focused on development issues. Offices currently vacant and those about to become vacant due to retirement will not be filled. In addition, $800,000 previously scheduled for transfer from the general fund to the street department will be cut back.

"We're currently asking each department for lists of priorities to decide what can be cut," Kramer said.

Loyd said she was concerned about the impending development of businesses such as Target, Marshall's and Kohl's in Bullhead City and the draining effect it could have on the economy here in Kingman. Loyd urged residents to shop locally as much as possible.

"(Local businesses are) part of the community," she said, "and they give back to the community by doing things like supporting soccer teams and other programs."

Long term plans to increase tax revenue are more complicated. Loyd said if voters approve the bond issues in November, the city would be able to put money back into the community via construction projects. "New construction equals jobs for citizens, which means they can afford to shop and put money back into the city," Loyd said.

Loyd said that in the 2001-02 fiscal year, Kingman experienced a stagnant economy along with the rest of the nation. She said the city issued bonds worth about $5 million for the East Golden Gate area, which "assisted area contractors in surviving the slump."

"We were hoping that we would be able to provide economic opportunities to a wide range of people at Rattlesnake Wash and Kingman Crossing," Loyd said. "Until issues with those projects are settled, we're not able to move forward."

Kramer said developers believe Kingman could support more retail.

"[Developers are] not going to be putting that kind of money into a community that can't support them."

Loyd said the burden of proof is on a developer to prove that a city can support the incoming business in order to obtain financing from lenders.