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Fountain Hills revenue update: town remains ahead of conservative projections despite February slump
Summary
Finance staff reported that third-quarter revenues are about 14% above the town’s conservative projections for the year, with total TPT collections of $5.5 million and sectoral shifts including a contraction in February and growth in services and restaurants. The removal of the long-term residential rental tax affected February figures.
Finance staff presented the town's fiscal year 2025 third-quarter revenue update, reporting that the town remains ahead of conservative projections for the year but showing mixed results across revenue categories.
Paul (finance staff) told the council that while February 2025 was a contraction month ("about 12% lower local sales tax revenues"), the town is "still 14% above our conservative projections for the year." He reported the town's total net taxable activity for the quarter was about $192,000,000 (a 2.8% decrease year over year) and total TPT (transaction privilege tax/local sales tax) collections of $5,500,000, approximately $1 million more than the conservative projection but down 1.5% from the prior year. Retail sales — the town's largest local sales-tax category — were roughly $3,000,000 (about $330,000 more than projected, up close to 2% from the prior year).
Paul highlighted category-level trends: remote sellers swung up (a roughly 17% increase in quarter 3 after a prior decline), construction sales tax declined about 26% compared with last year though YTD collections remained ahead of conservative projections, utilities and communications were down 0.6% for the quarter, and restaurants and bars rebounded with an almost 9% increase over the prior year for the quarter.
State-shared revenues were generally on track; vehicle license tax receipts surprised upward by about $40,000 for the quarter. Paul and staff said the town had already factored termination of the long-term residential rental tax (a state change) into the projection baseline beginning in January 2025; February collections reflect the first month of that change.
Council members asked questions during the presentation; no formal action was required. The presentation will feed the council's ongoing budget discussions and monitoring.
