City tax receipts down 4 percent

Lower utility bills major cause in revenue decrease

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— The city might have planned for fewer tourists this season to mean less money for its budget, but the biggest drop in its sales tax revenue came from smaller utility bills, not less tourism.

The sales tax numbers from January to March show the city took in $4.8 million, which was a 4-percent decrease from last year.

Although the 4-percent decrease is more than the 3-percent decrease the council had budgeted for last fall, City Finance Director Don Taylor said the city will be able to make up the difference as the year progresses. He is projecting sales tax revenues from April to December will be about even to what they were in 2001.

"There was a concern that it was going to be worse. It was bad, but not as bad as people feared in the weeks and months after Sept. 11," Taylor said.

Surprisingly, the biggest change came from dropping utility bills, which meant $99,000 less revenue for the city more than half of the city's total drop in sales tax revenue from this year's first three months to last year's.

Taylor said the significant difference can be explained by the sharp increase in utility costs last year, which was influenced by economic factors like the California energy crisis. Figures from the past 15 months show that after last March, revenues from sales tax on utilities dropped, and although they rose slightly during the colder months, they never returned to the high levels of early 2001.

"Bills jumped in 2001. There was a kind of gas and energy crunch," Taylor said. "Both electric and natural gas went up significantly last winter. That came back into balance and (sale tax revenue) came back down this year."

Although this year's utility collection was a 24-percent decrease from last year, sales tax revenue from utilities accounts for less than 10 percent of the total dollars the city collects on the taxes.

Decreasing utility costs might have been determined on a much larger national market, but a downturn in the local economy led to a $98,000 drop in sales tax revenue for miscellaneous retail items. Last year, miscellaneous items' total contribution to the city was $6.5 million, or almost half of its sales tax revenue for the entire year.

Lodging also brought in less revenue for the city with a 3.4-percent decrease from last year, causing $52,760 less in sales tax to be brought in than 2001.

Sales tax from lodging and miscellaneous retail account for more than 60 percent of the money brought in for the first three months.

While miscellaneous retail items, lodging and utilities took the biggest hit, revenue from restaurants, liquor stores and sporting goods actually increased. Combined, the three industries brought in $54,000 more in sales tax.

Because of a fear that tourism would decline and sales tax would drop in the days after Sept. 11, the council cutback its budget in October.

But it had discussed finding another way to finance its long-term capital projects long before the economy went into a significant downturn.

City Manager Paul Hughes said the city is looking at three alternatives for raising taxes for capital improvements that could come before voters in November. Those options will be reviewed at the second council meeting in June.

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