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Finance committee hears mixed revenue signals: local sales tax up, state share and hotel receipts lag
Summary
Finance staff told the committee local sales tax receipts are about 5% above the prior year but overall collections may end below the current budget; state-shared sales tax is weaker and hotel-motel tax receipts have not recovered to prior expectations. Stormwater revenues are steady and expected to finish slightly above last year.
Finance staff reported mixed revenue trends during the Finance Committee meeting May 27. Local sales tax receipts for April were about 5% higher than the same month last year, but year-to-date collections and pacing suggest the city could end the fiscal year below the current budgeted amount.
Tamara Ingersoll said the city budget includes $22,000,000 in sales-tax collections for next fiscal year and that collections so far leave the city roughly $1.2 million short of matching budgeted pacing for the final two months. She said a combination of below-expected collections earlier in the year and a slow March contributed to the shortfall. Ingersoll advised the committee to watch May and June receipts closely.
State-shared sales tax lagged the locality, running roughly 2.4% above the prior year but about $40,000 under the budgeted figure. Committee discussion noted Hendersonville was outperforming the statewide average.
Hotel-motel tax receipts picked up in the last two months but remain below budgeted expectations. Committee members asked about the effective date of the current fee; Ingersoll said the higher 4% rate took effect in August 2023. She also said the finance office does not track hotel occupancy rates on the form used for the committee report and that exemptions (stays over 30 days) can affect collections. That explains some divergence between occupancy and tax receipts, she said.
Stormwater revenues were consistent with the prior year and are projected to finish the year slightly higher than last year. Staff attributed prior-year month-to-month fluctuations to timing of payments and delinquent notices, not structural changes in the fee.
Committee members asked several clarifying questions but did not take formal action on revenue items; staff said they would continue to monitor receipts as the fiscal year closes.
