City sales tax collections short over half million dollars

That sales tax rebound which city officials had hoped for to close out the 2007-08 fiscal year, is a few thousand dollars short of expectations.

September sales taxes, reflecting August sales, was $4.78 million, down from $4.82 million collected the same time last year. Collections have been down four of the last six months.

Even though the city is more than a half million dollars short for the year, Dothan Finance Director Angela Palmer said the city is better off than a lot of communities.

“Since we budget our revenues very conservatively and are extremely liberal on our expenditures and because of the additional 1 percent, we are in better shape financially than most cities during this economic crisis,” Palmer said.

Dothan received $60.32 million in sales taxes this past fiscal year. That was $694,477 under budget, but Palmer said had the city not put on a 1-cent sales tax, effective January 2007, the city would be short $8.43 million.

Over the last two fiscal years, total sales taxes collected was $54.59 million in 2007 and $44.25 million in 2006.

Palmer said there are areas of concern in the city’s budget. The city has not received all the promised funds for the police department’s new communication system through technology and Homeland Security grants, that came about due to the re-banding.

“This fiscal year we had to pay out an additional $4 million in debt service,” Palmer said.

And going into the 2009 year, the city expects shortfalls of about $726,000 in the gasoline budget and $250,000 in the electricity budget.

Additional non-budgeted items to pay for in fiscal year 2009 are:

n $4 million for the Fortner/Honeysuckle improvement project;

n $2 million for the HVAC at the Civic Center and Dothan Utilities Department;

n $1 million plus for right-of-way acquisition for the 231 North improvements.

“There were additional commitments that were not in the original budget for fiscal year 2009, such as $1 million for the schools, $50,000 for the Council on Aging, and $50,112 for the Wiregrass Museum of Arts,” she said.

“All of this will be paid out of our reserves unless our sales tax and electric sales come in over budget. Those two revenue sources are the only place we can go to fund additional, non-budgeted expenditures.”

In the next month the city is expected to approve a state revolving loan through the Alabama Department of Environmental Management for approximately $10 million for the Beaver Creek sewage treatment plant replacement which will increase the debt service to around $725,000, Palmer said.

“This is only $10 million of the $46 million to be borrowed over the next several years,” she said.

Over the last year, the city’s strongest collection month was October, when $5.1 million was collected; in the previous year, the strongest month was April, when $5.5 million was collected. April was also the highest collection month in 2006 ($4 million). April 2008 collections were $4.8 million.