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Valley sales-tax revenues decline: Cities have decreased funding as residents begin spending less in stores.(Fresno Bee (CA) (KRT) Via Acquire Media NewsEdge) Jul. 6--There's more bad news for some Valley cities already struggling with super-tight budgets: In the first quarter of 2008, sales-tax revenues took a nose dive. The declines are even steeper than some city administrators had expected -- and that means hundreds of thousands of dollars less for things like police, parks and roads. In Clovis, for example, sales dropped by 7.7% in the first quarter compared with the same period last year. "I had anticipated a 4% reduction, so the 7.7% drop really caught us off guard," Clovis finance director Robert Woolley said. The figures from the state Board of Equalization also hold good news for some communities. In Kerman, for example, sales-tax revenues were up 12.2%. This came on the heels of a 17.5% increase in taxable sales last year compared with the year before. Ron Manfredi, Kerman's city manager, credits expansion of two agricultural chemical companies for the jump. In larger communities, however, there were mostly declines. Of seven Valley cities with populations of more than 50,000, only Hanford had a significant rise in first-quarter taxable sales, about 4.1%. Finance Director Tom Dibble said the increase -- about $78,000 for the first three months -- was "nothing to crow about," but it's positive compared with other cities. Hanford, he said, has a Wal-Mart Supercenter that is less than a year old and a Toyota dealership that moved to Hanford last year from Sanger. Even so, Dibble said, the city has left positions unfilled in preparation for difficult times. "At least we are somewhat breaking even," Dibble said. "We had anticipated growth of 4%, so we are flat with where we anticipated." Around the state, big-ticket items are not selling, and construction has slowed to a trickle. "Construction-related jobs and purchasing are down, and auto sales are down," said Michael Coleman, a fiscal policy adviser for the California League of Cities in Davis. Tourism-based economies have fared better, Coleman said. Taxable sales in Mariposa County, for example, were up 8.1% in the first three months of 2008. "I think part of it is the weak dollar bringing Europeans," said Mary Hodson, Mariposa County deputy administrative officer. Sales and property tax revenues pay the lion's share of police and fire services. They also pay for parks and some road projects in many cities. It's up to city officials to project those figures before the start of each year. Property-tax revenue will likely show a small increase in the coming year, officials say, but with foreclosures rising and real-estate values falling, those gains will likely not offset the continuing lag in retail sales. For Clovis, the grim outlook means city officials are searching for ways to save money. The city is seeking more than $1.1 million in "givebacks" from the city's four unions. Negotiations are ongoing, said Woolley, the finance director. The city is considering layoffs and offering certain long-term employees retirement incentives. Last year in Clovis, sales-tax revenues dropped more than 4% compared with the year before, costing roughly $650,000. Sales at some Clovis auto dealers are down 25%, Woolley said. About 18% of the city's sales-tax revenue comes from auto dealers, he said. But Woolley said he hopes that federal income tax rebate checks will generate new revenue for the second quarter. The city's new Best Buy store on Herndon Avenue also may inject about two weeks of revenue into the city's treasury for the second quarter, and add revenue through the rest of the year. In Selma -- which gets 47% of taxable sales revenue from auto sales -- sales-tax revenues dropped 16.6% in the first quarter, costing about $190,000. City Manager D-B Heusser said the city laid off three employees, and others were taking early retirement incentives to reduce the city's work force. A positive sign, Heusser said, is that the city's new half-cent public safety tax measure, Measure S, raked in a little more money than anticipated since starting in April. In Porterville, sales-tax revenues were down more than 9% from the first three months of 2007. City Manager John Longley said officials expected the drop. The city's Target store has been undergoing a renovation, which likely played a role in the shortfall. The cities along Highway 99 -- Visalia and Tulare -- have been more stable than Porterville, Dinuba and Exeter, which are along two-lane roads. Visalia's sales inched up 1.3%, while Tulare's fell 1.7%. Fresno's large retail base likely spared the city from a large decline in sales-tax revenue, said Renena Smith, Fresno's budget director. Taxable sales fell by 2.7%, roughly $506,000, but she said the city was prepared. Smith said sales-tax revenue was lower than planned but that the property-tax revenue is higher than expected. "If the economy continues the way it has, budgeting for 2010 is going to be very challenging," Smith said. The reporter can be reached at [email protected] or (559) 441-6166. To see more of The Fresno Bee, or to subscribe to the newspaper, go to http://www.fresnobee.com Copyright (c) 2008, The Fresno Bee, Calif. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |