Sales taxes down 8 percent; property tax growth minimal

Despite the slowing economy translating to lower sales tax collections, Peachtree City is only short $40,000 in this year’s budget.

Much of that is thanks to the Georgia Department of Transportation, which paid the city $200,000 for some property needed for the right-of-way to widen Ga. Highway 74 south, Finance Director Paul Salvatore told the City Council at its retreat Friday morning.

Also helping matters is that the city carried over $483,000 from last year’s budget, Salvatore said.

Still, city staff is predicting a total revenue shortfall of $438,000 at the end of the year, equal to 1.6 percent of the city’s overall budget,

Salvatore explained. That projection is based on the 8.5 percent sales tax decline experienced so far this budget year, and preliminary projections from the property tax digest.

The city’s property tax digest has typically grown from 5 to 6 percent annually but this year the projected increase is only 1 percent, Salvatore said. The low figure was due to the dramatic downturn in new homes, he added.

The city won’t take as big a hit though because Salvatore only projected the city to get a 2.5 percent increase in the tax digest.

January’s sales tax collections, which are indicative of December holiday sales, showed a decline of 10 percent, Salvatore added.

“It may be worse but hopefully it will be better,” Salvatore said. Through the end of January, the city is already down $653,000 in sales tax revenue.

In the same time frame the city also has spent 6.7 percent less than projected for a savings of $583,000, Salvatore reported, with each city

department staying under its projected expenses. Most of the savings is due to position vacancies, some of which have already been filled, he added. Without any further cost-saving measures, the city should be able to keep its expense savings at the current level, Salvatore is projecting. The savings is not expected to decrease, however, as positions will likely be filled, he added.

Other possible cost-saving measures could include a temporary hiring freeze, impounding funds in the operating budget or even additional outsourcing of right-of-way mowing, Salvatore told council. In addition to the dip in sales tax revenues, the city is also coming up short in fees from building permits and also court fines, Salvatore reported. Building permits are $88,000 behind projected levels and court fines are down $61,000, according to staff.

This year’s city budget already was projected to use $852,000 from its cash reserves to avoid a higher property tax increase, but that figure should shrink to $706,000, Salvatore is projecting.