Good news: sales tax spiked in December for holidays

Despite taking a number of actions recently to shore up a potential multi-million dollar shortfall in next year’s budget, Peachtree City officials are still estimating a projected $2.2 million deficit.

Finance Director Paul Salvatore had a bit of good news, though, at Friday’s annual City Council retreat. The decline in sales taxes was staved off in December as holiday shoppers drove revenues to $63,000 over projections.

“We were happy to see people were spending around Christmas time,” Salvatore said.

Councilwoman Cyndi Plunkett said many people still don’t realize when they purchase items online they are not paying sales tax.

The city is projecting an additional decline in overall revenue of approximately $779,000 this year. Topping those declines are $200,000 in projected interest earnings, as rates of return have fallen drastically, Salvatore noted. Close behind that shortfall is a projected $164,000 decline in building permits as the economic slowdown continues to lean on the construction and development industry.

One big issue is that the city will not realize a projected savings of $636,000 from vacant positions, as employees are not leaving the city as projected due to the economy, Salvatore said.

That figure is equal to roughly 2.5 percent of the budget, Salvatore noted.

The city is preparing itself for the economy’s woes to continue next year. Initially the city was supposed to use $1.14 million in cash reserves this year but the recent round of budget cuts have reduced that figure to under $400,000. The city ended last year with its cash on hand equaling 37.5 percent of projected annual revenue, Salvatore said.

Already the city has eliminated 23 positions in the city’s public works and recreation department of crews who conduct landscaping and maintenance, projecting a $840,000 savings from using a contracted firm instead. Also the city is eliminating all cost of living and merit increases for next year and already has started collecting double

There will also be more savings from the public improvement program including a postponement of purchasing a new rescue vehicle for the fire department.

More cuts will be coming from staff recommendations, Salvatore said.

Councilman Doug Sturbaum said he appreciated staff’s work and particularly for the continuous budget updates.

“I was glad to hear the December figures,” said Mayor Harold Logsdon.

Logsdon said he wondered if the local chamber of commerce “Shop in Fayette” campaign helped increase the local sales tax collections.