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Hendersonville reports stronger sales- and hotel-motel-tax receipts; stormwater revenues steady though reserves prompt discussion
Summary
Staff reported state-shared and local-option sales tax and hotel/motel receipts are coming in stronger than last year and projected to exceed budgeted amounts; stormwater receipts are steady and staff noted additional delinquent collections and grant support may allow keeping the stormwater fee flat for now despite reserve targets.
City staff told the Finance Committee that state-shared sales taxes, local-option sales tax and hotel/motel receipts are trending above last year and may exceed the amounts budgeted for the current fiscal year.
The presenter said August figures are trending higher than the prior year and that an initial estimate for a local-option remittance was "just a hair over $1,900,000." Staff cautioned the estimate is preliminary until the county completes its allocations. The state administrative fee was reduced effective July, which is reflected in the city's reports, and staff said a larger debate continues at the state and county levels about how administrative fees should be allocated between state and county.
Hotel/motel receipts were reported as coming in strong; staff noted a small outstanding check from a minor lodging business that will be added when received. Investment earnings dipped slightly in August compared with July, which staff attributed to timing and anticipated year-end portfolio movements; however, overall investment projections are expected to exceed budgeted amounts for the year.
Stormwater receipts were discussed in the context of the newly adopted fund-balance policy amendment requiring a 16.67% reserve for special-revenue funds. Staff said that delinquencies collected in July and August improved stormwater receipts relative to the prior two years and that the city has supplemented stormwater projects with ARPA funds and grants. Committee members discussed whether stormwater fees should be increased to build reserves; staff said any fee change would be a cost-recovery, utility-style calculation and could involve an external consultant to recommend a fee based on cost analysis. For now, staff said grants and existing funds allow keeping the stormwater rate flat but recommended monitoring the fund balance and grants over the coming year.
