Chatham County Q2 budget update: sales-tax slow-down offsets one-time FY24 permit spike; expenses generally on track

Chatham County staff gave commissioners a second-quarter (July–December) fiscal-year 2025 budget update on Jan. 21, describing steady property-tax collections, recent improvements in capital outlays and a modest decline in sales-tax receipts compared with the unusually strong year in FY2024.

Daryl Butts, a county finance staff member, told the board the update is a high-level review and does not present line‑by‑line detail. “So, in this case, it's a second quarter update, which is the first six months of the fiscal year,” Butts said. He noted the presentation excludes certain volatile items such as interest revenue and year‑end transfers.

The presentation highlighted three main points: benefits spending looked high due to accounting timing of transfers to the county—s self‑insurance fund; allocations and debt payments are driven largely by the Chatham County School System; and capital outlay spending has improved after a backlog of vehicle purchases and long delivery times following the pandemic. “We're finally off our backlog of vehicles from previous fiscal years,” Butts said, describing a turnaround from 9–12‑month waits to 1–2 months for many vehicle orders.

On revenues, staff said ad valorem (property) taxes are concentrated in November through January; by the end of December property‑tax receipts were already above the midyear point typically expected. By contrast, sales tax collections through the period represented roughly a third of the annual budget and were about $67,000 behind where they were at the same point last year. Staff attributed part of FY24—s unusually high collections to one‑time industrial permitting and inspection activity tied to Wolfspeed, and cautioned that FY25 appears to be returning toward more normal, slower growth.

Staff reiterated that Article 46 (earmarked sales‑tax revenue) was budgeted at $3.2 million for FY25 and, through four months of collections, was on pace to meet that budget though modestly behind last year. Butts said staff would recommend a budget amendment if Article 46 collections exceed the adopted amount.

Commissioners asked several technical questions — about transfers in/out, accounting for leases under GASB 87, and the composition of intergovernmental and miscellaneous revenue categories — and staff provided clarifications about accounting timing, the recent GASB lease reporting change and the components of intergovernmental receipts. The board took no formal action on the budget update; staff said they will return with additional detail as needed.

Looking ahead, staff noted January collections will be an important data point for finalizing revenue performance for the fiscal year to date and recommended continued monitoring of sales‑tax trends and development‑related revenues.

Staff contact: Daryl Butts, county finance staff.