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Payson mid-year report shows lower-than-expected sales tax but reserves remain to fund planned projects
Summary
Finance staff reported general fund revenues below budget driven by weaker sales tax receipts; town staff said planned capital spending and HEERF projects will be adjusted and council will have FY26 capital proposals next week.
March 3, 2025 — At its mid-year budget update, Payson finance staff told council that general fund revenues are projected to come in below budget for FY25, largely because sales tax receipts are down compared with expectations; staff said the town still retains fund balance to cover planned capital work, but reserves have drawn down from prior levels.
Finance Director Dana reported that the town now projects general fund revenues of about $35.7 million for the fiscal year, roughly $4.3 million below the current budget. Sales tax receipts and state-shared tax revenues were the primary drivers of the shortfall; Dana said town sales tax collections are down about 14% compared with the prior year at a constant rate (not counting the council-approved 1% TPT increase).
On the expenditure side, Dana projected general fund spending of approximately $40.5 million for the year, below the $48 million budget largely because of unfilled positions and lower-than-expected service and bond-related payments after the bond measure did not move forward. The town expects to use fund balance to cover a planned deficit this year; staff estimated the unrestricted general fund balance at year end to be roughly $3.2'$3.3 million after accounting for the council's reserve policy.
Dana also reviewed the HEERF (street/transportation) fund and the water fund. HEERF revenues and expenditures are both expected to be lower than budgeted because several street projects did not start this fiscal year; the water fund is projected to run slightly higher expenditures than revenues for FY25 but retains a large fund balance that staff said can cover planned capital needs.
Council members asked several budget questions, including how IPM (interim staffing) costs are charged and whether the 1% local transaction privilege tax (TPT) brought in the expected revenue stream. Dana said the 1% TPT is projected to generate about $5.6 million annually going forward, but current-year receipts are lower than originally forecast because of the sales tax downturn. Staff said they will present FY26 capital project proposals and a clearer picture of available funds at the next meeting.
Ending: Town staff said they will bring a FY26 capital project list and more granular month-to-month financial reports to the council; the mid-year briefing left council with an understanding that the town must align project spending to a smaller available unrestricted balance than in prior years.
