Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the City Finance Revenue topic
No spam. Unsubscribe anytime.
Flagstaff trims some sales- and lodging-tax forecasts, keeps conservative recession plan
Summary
City financial staff told the City Council that general-fund revenue growth is modestly positive but uneven across categories; the budget team shifted its recession assumption from a 3% temporary decline to a flatter scenario to preserve capacity for employee compensation.
Rick Potter, management services director for Flagstaff City, told the City Council at its April 24 budget retreat that revenue growth is modest but uneven and that staff revised some projections after seeing January–March returns.
Potter said the city is projecting about 2.5% growth in general-fund sales tax this year but has pared back estimates in retail/marketplace and in hotel/motel collections after weaker recent months. He also said state-shared revenues and vehicle-registration (auto-license) receipts were stronger than earlier expected.
"Uncertainty is a a very key word we're having," Potter said, describing federal policy changes, tariffs and other national-level developments that complicate forecasting.
Why it matters: General-fund revenues determine how much the city can commit to recurring items such as compensation, public safety staffing and maintenance. Potter said the budget team adjusted its recession planning approach to protect money for staff pay and other priorities.
Details that matter
- Potter told council staff moved down retail/marketplace projections after January declines but saw March collections improve. He said hotel/motel receipts were trimmed to roughly 1% growth in next-year projections after several months of year-over-year declines.
- State-shared revenues were revised up after stronger-than-expected January–March returns; Potter said vehicle-registration (auto) receipts led that improvement and drove a projected 5% gain on the state-share side compared with an earlier 3% assumption.
- On recession planning: Potter said budget staff considered a historic approach of assuming a 3% temporary revenue decline in a downturn but instead "decided to keep it flat" in order to free resources for compensation needs, while relying on the city's recession-planning tools if a downturn materializes. "Instead of doing a 3% decline, let's just keep it flat," he said.
- Potter flagged a potential $70,000 annual exposure if certain state income-tax changes affecting tips were adopted; he said Arizona does not tax Social Security so federal changes to Social Security would not directly change state income-tax treatment.
What happened next: Council used Potter's updated projections as the revenue baseline for the city manager's recommended budget and asked staff to continue monthly monitoring and return if conditions change materially.
Ending: Potter closed by urging continued monitoring: "We'll be watching these revenues month after month," he said, and promised to come back to council with updated results and any recommended changes to the budget plan.
