Smithville staff reports first-quarter FY2025: sales tax holding but city watches proposed grocery-tax cut

City staff presented first-quarter fiscal 2025 results during the Smithville work session, saying overall revenues and expenditures are tracking close to budget but emphasizing that certain factors merit monitoring: timing of property-tax receipts from Clay County, sales- and use-tax performance, interest income, ongoing development-related building permits, and several planned water and wastewater projects.

Rick (staff member) told the board the general fund had received roughly 36% of budgeted revenues for the year to date, a number inflated by early property-tax receipts; he said property-tax receipts were at about 84% of expected annual receipts because a large county remittance typically arrives in January and another hit came a few days into February. Rick also said salary and benefits were “right on par” at about 25% of budget.

Sales tax and use tax performance so far was described as strong for the first quarter, but staff cautioned that consumer-confidence changes and proposed state legislation could change that outlook. Staff discussed Senate Bill 57 as presented at the meeting: the proposal discussed would phase out sales tax on groceries over multiple years, with a stair-step reduction beginning next year and continuing toward elimination by 2030 according to the summary staff presented; staff said if the state removes grocery sales tax, local revenue impacts could be substantial because they estimate a meaningful share of city sales tax comes from food and grocery sales.

Interest income has outperformed the original projection, and building-permit revenue to date has been driven largely by two projects staff named on the record: Fairview Crossings (under way) and the 110 Smithville project (expected to move this summer). Staff said first-quarter performance means the city should meet its current building-permit projection of about $200,000 for the year if those projects continue.

On utilities, staff reported that combined water and wastewater revenues and expenditures are generally on track; impact fees have produced a material balance because of recent construction, and staff said impact-fee proceeds are earmarked for capacity-expanding projects. A bid for the 140 Fourth Street pump station came in at about $3,343,340, and staff said an additional roughly $100,000 will be required to bring power to the site; the city expects to award that contract in the next meeting cycle.

Staff discussed the capital improvement and transportation sales-tax funds. Rick said the transportation sales-tax fund could absorb the $70,000 street-maintenance amendment staff proposed and that the fund is projected to end the year with an approximate balance near $500,000 after the amendment. Staff also briefed the board on the vehicle and equipment replacement fund and said the city is delaying nonessential replacements to reduce pressure on that fund; Enterprise leasing arrangements and vehicle mileage were discussed as part of that strategy.

Other items noted: the sanitation fund recorded higher expenditures than revenues for the first quarter because of the annual household-hazardous-waste program payment; staff confirmed a city household hazardous-waste and e-waste event in April and asked for volunteers. Park and stormwater funds were discussed with reference to pending projects, including the Railroad Trail and the Dundee River stormwater project (staff said the latter is on hold pending engineering capacity). Staff said they will return with more detailed impact-fee breakdowns and continued utility-fund discussions at upcoming meetings.

A motion to adjourn the work session passed by voice vote at the end of the meeting; no other formal fiscal actions were taken during the work session. Staff will return with formal budget-amendment materials if the board schedules the street-maintenance amendment for a business meeting.