In a recent government meeting, the finance director provided a concerning update on the city’s tax collections, revealing a significant decline in both hotel and sales tax revenues for the third quarter of the year.

The hotel and motel tax collections fell by $290,000, or 5.7%, compared to the previous year, and were approximately 4.5% below projections. The report indicated that while higher-end hotels performed relatively well, budget and economy hotels struggled with both occupancy and room rates.

Sales tax figures for October also showed a downward trend, with collections 2.2% lower than the prior year and 3.3% below projections. This marks the fourth consecutive month of decline in retail sales tax, which constitutes about 46% of the city’s monthly tax revenue. Notably, seven out of twelve retail categories reported decreases, with building materials down by 12.2%. Conversely, food stores and restaurants saw increases of 4.7% and 3.9%, respectively.

The use tax, which is also experiencing a downturn, was reported to be 9.7% below the previous year and 15.8% below projections. The retail portion of the use tax declined by 3.4%, marking the first drop after a period of steady growth.

Overall, the city is currently $5.4 million below budget for the fiscal year through October. The finance director noted that these trends align with forecasts from Dr. Evans, who anticipated a decline in the first half of the fiscal year, with expectations for recovery in the latter half. The treasury staff is actively monitoring tax collections and investigating any anomalies in remittance.

This update highlights ongoing economic challenges facing the city, particularly in the hospitality and retail sectors, as officials continue to navigate the financial landscape.