Sonora, CA — Revenues for the City of Sonora are coming in lower than expected during the current fiscal year.
Fiscal Year 2014 runs through the end of June. City Administrator Tim Miller say there has been one area of notable concern thus far. “At mid-year we’ve determined that the sales tax is going to come in less than what was in the budget,” he says. The City had projected a 3.5% increase in sales tax revenue compared to last year, but new projections indicate that revenues will come in slightly below last year’s numbers.
“For a city of our size, and the revenues we receive, it is going amount to somewhere between a 150-to-200-thousand dollar shortfall, which is a big impact to the city,” adds Miller.
The city has identified a couple of contributing factors. “There are some retail categories that are off, one of those being wholesale building materials,” says Miller. “Gas prices were down during the last reporting quarter. While everyone is glad to see that the gas prices are down, it does impact our sales tax. The third thing that happened is that there were businesses that recorded sales in the city, that actually weren’t in the city. And there’s a claw-back provision, if you will, where the state reduces our allocation based on overpayments in prior periods. That combination led to the reduced revenues and lower projection through year-end.”
In addition to sales tax revenue, Miller says there are also additional costs related to workers comp matters, and the unexpected retirement of the Fire Chief. The City Council must decide over the coming months how to cover the deficit. In the past, Miller says the City has used different strategies, such as not filling open positions. Another strategy could be to delay some planned equipment or capital outlay purchases.