City finance staff: revenues running ahead of budget after one large use-tax payment

Erin, a city finance staff member, told the Mayor and Board of Commissioners during a study session that year-to-date collections across all city funds are about 69% of the annual budget and that the general fund and the municipal authority (EMA) are the largest drivers of the variance. “Throughout 6 months we’ve collected overall 69% of the revenue that was budgeted for the year,” Erin said.

Erin said general fund year-to-date receipts totaled $45,400,000 against a six-month budgeted amount of $30,000,000, yielding a $15,300,000 positive variance. She attributed roughly $5.2 million of that variance to stronger sales tax receipts and singled out a late payment from a large manufacturer as a major factor: the company paid an overdue use tax of about $3.8 million in December, a one-time event that contributed to a roughly $4.3 million December variance. “Typically, that is not the norm,” she said of the manufacturing company’s payment.

The finance presentation broke down sales tax by industry and showed retail accounts for about 60% of local sales-tax receipts, followed by hotels and restaurants at 17% and manufacturing and wholesale at 9%. Erin said retail grew about 2.6% year over year and hotels/restaurants were up roughly 2.2% for the fiscal year. Hotel-motel tax collections were $117,000 above projections through six months, or about a 12.3% increase from the same period last year.

On the municipal authority side (EMA), Erin reported year-to-date receipts of $45,500,000 versus a budget of $32,800,000, a variance of roughly $12,000,000. She said some of that variance reflects reimbursements and one-time drawdowns: the city received a $1,500,000 FEMA reimbursement tied to a 2020 ice-storm claim and about $4,900,000 in drawdowns for a local program (referred to in the presentation as the “Colleague program”). Removing those two items would bring EMA’s variance much closer to projection, she said.

On expenses, Erin said most departments were near target at the midyear point but identified specific funds and line items that are above typical year-to-date levels because of timing or encumbrances. She described contractual-services and capital-outlay lines as appearing high in some funds because the city posts encumbrances and prepaid annual costs (insurance and software renewals) early in the fiscal year. She also listed several funds and items the administration is watching for possible budget amendments: additional property purchases on Randolph or Route (general fund), possible FAA projects at the airport that could move ahead sooner than planned, SRF loan amortization and administration adjustments in EMA, and capital-improvement engineering for a planned new complex.

Erin told commissioners that several grant-funded projects rely on reimbursements and that some federal agencies have put a temporary “pause” on processing; she said staff are submitting paperwork and are tracking responses from 15 to 20 agencies. “They can pause based on their own agency’s stance,” she said, adding the city’s legal department is reviewing impacts and staff will monitor each agency’s handling of the pause.

On near-term appropriations, Erin said higher-than-budgeted revenue can require additional appropriations because some receipts must be transferred or paid out: the one-percent sales-tax transfers to the municipal authority and hotel-motel tax shares that are paid to Garfield County and the event center. She noted the event center’s subsidy is running higher than planned and that department staff will meet with department heads to refine projections; one projection cited in the meeting put the event-center shortfall at about $154,000 for the year.

Commissioners asked clarifying questions about the spike in December sales/use tax and whether expected grant dollars or the airport generator grant would fully cover planned expenses; Erin said the airport’s $70,000 grant likely won’t cover the full cost of the generator, estimating the equipment at about $85,000 and saying the airport would cover any match. Commissioner questions and a brief public comment praising Chestnut Avenue construction followed the presentation.

Staff said they expect to return with appropriation requests for some items later in the fiscal year but emphasized that several of the flagged needs are revenue-driven or grant-funded; in those cases, higher revenue or awarded grants would cover the appropriations. Erin closed the presentation by saying staff will continue department-level reviews to limit late-year surprises and will report back as appropriation needs crystallize.