City revenue trails projections

Finance director says trend points to budget shortfall of less than 1 percent

KINGMAN - A new budget report released by the city finance department has found that while year-over-year sales tax collections were down more than $1 million in 2008, collections for the fiscal year's second quarter were only slightly behind budget projections.

The report, which was presented to the City Council by Finance Director Coral Loyd Monday evening, states that sales tax collections for the first six months of the fiscal year are down 8.5 percent from the first six months of FY2007-08. Despite this, Loyd said, if collections continue at the rate they have, the city will end the year less than 1 percent under the $12,350,000 budgeted for FY09.

Looking at the rolling 12-month period, Loyd said collections were down 8.28 percent in 2008 from 2007, with the sharpest drops occurring in October and November, after the collapse or sale of several major financial investment firms in September caused consumer confidence to plummet. Loyd noted, however, that sales tax receipts were actually up for the month of December, albeit less than half of one percent over the 2007 figures.

Breaking general fund revenues down by individual sources, Loyd said the biggest concern for Kingman going into the second half of the fiscal year were its share of the state sales, income and auto lieu taxes and the dwindling receipts of the highway user revenue fund, or HURF. Loyd said the shared state taxes would continue to be a concern as the state legislature looks for places to save money in order to offset a $1.6 billion budget deficit, and the HURF revenues would likely continue to remain below expectations due to fewer motorists taking to the road.

Looking at the different industries that provide Kingman's sales taxes, Loyd said receipts for construction and restaurants were actually up slightly over the first six months of FY08. She noted, however, that the increase only amounted to $65,857, while Kingman's largest sales tax contributor, retail trade, lost fully five times that amount over the same period, dropping 9.61 percent from FY08.

Despite the drop in tax revenues, Loyd said most city departments still have more than half of their budget allocation available at the fiscal year's halfway point. Only the parks and recreation and building inspection departments have spent more than half their allocation, as well as the City Council itself, though Loyd noted the Council budget is almost entirely dedicated to specific types of community programs, such as the Friends of the Kingman Library and the Kingman Resource Center, and membership fees to representative bodies such as the League of Arizona Cities and Towns and the Western Arizona Council of Governments.

Overall, Loyd said revenues have continued to outpace expenses, due to constant diligence from the finance department, with adjustments coming as needed.

"We have recently completed the midyear budget adjustments by reducing the budget further by about $1.9 million," Loyd said. "We'll continue to evaluate that and make adjustments if we need to over the next several months."