Shelton finance director: January report shows lower sales tax receipts and reliance on one-time funds to balance 2025 budget

Mike Evans, Shelton's finance director, presented the city's first financial report for fiscal-year 2025 (January data) at the March 18 meeting, telling the council the general-fund beginning balance was just over $6.4 million and that staff currently estimates a year-end general-fund balance near $5.4 million.

Evans told the council staff prepared the report with conservative assumptions. He highlighted a 20% reserve set aside per council policy and noted the report breaks the beginning and ending balances into reserved and unreserved portions to show available one-time resources. Evans said that, as of the January snapshot, the city planned to rely on approximately $1.1 million in one-time money to balance the 2025 budget but that, based on current trends, the amount actually used might be closer to $900,000.

On revenues, Evans said sales-tax receipts tied to November sales (received in January) were down about 6% compared with November 2023; he added December receipts (reported in the February update) were down about 4% versus the prior year. Evans said the city will continue to monitor collections monthly and that the sales-tax base in Shelton is driven largely by general retail rather than high-ticket vehicle or lodging sales.

On expenditures, Evans cautioned that it is difficult to forecast after only one month of data, but he noted some variances are expected. He cited the city's contract with Central Mason Fire for fire and emergency services: that contract value is tied to assessed valuation, and final assessed values came in lower than assumed when the budget was adopted, causing a variance in that line.

Evans also reported the city had about 2.5 full-time equivalent vacancies in the general fund as of January and said staff are actively recruiting. He told the council a more detailed forecast and multi-year outlook will be part of a study session planned for the next week and a council retreat scheduled for May 5.

Why this matters: sales-tax trends influence the city's largest revenue stream, reserve levels constrain the city's flexibility, and the use of one-time funds to balance the budget affects planning for 2026.

What's next: staff will present a more detailed forecast at a forthcoming study session and bring budget-planning materials to the May council retreat.

Ending: Evans closed by saying staff will continue monthly reporting and will update projections as new fiscal data arrives.