City revenues, spending on track
Officials worry about possible supply chain disruptions
Revenue collections and spending by the City of Yuma is right on track. However, some officials worry about how the supply chain disruptions might affect the city.
Finance Director Douglas Allen presented a quarterly report to the council on Wednesday.
The revenues collected in the first quarter, from July through September, total $43.3 million, 23% of the budget. Revenues include city sales tax, state sales tax, road tax, public safety tax, 2% hospitality tax, gasoline tax, water and wastewater sales and solid waste fees. Property sales tax collections begin in October.
“As an overall, we’re looking at about 3.6% ahead of our benchmark for the major revenues for the city. That’s the good news,” Allen said.
He explained that when monitoring revenues, the city also compares historical trends with current collections and future expectations. Staff members also look at the factors that drive each revenue, such as potential risks that might jeopardize revenues.
Primary factors driving general revenues are consumer confidence and demand, population, tourism, ballot measures, legislative actions and changes in the consumer price index relating to inflation or deflation.
With three months into fiscal year 2022, Allen reported continued monthly year-to-year growth with a collection of 23% of the budget goal. The traditional first-quarter benchmark at this point is 19% of total yearend revenues.
“We’re collecting more because people are paying more for normal goods. To me, it is not a positive thing. I’d rather see prices go down and gas go down, then we collect more,” Councilman Mike Shelton said.
Councilwoman Ema Lea Shoop noted that many people have turned to internet shopping since the start of the COVID-19 pandemic. She asked whether online buying has made a difference in revenue collections.
Allen responded that it hasn’t translated to a big spike in collections, indicating that it’s not additional buying, only a different way of buying. He noted that people who are not going to brick-and-mortars are buying online.
As for city spending, Allen noted that expenditures should be near 25% for the first quarter, 50% the second and 75% the third. However, if many expenditures are made in single payments, such as an annual subscription or lease, a quarter could run higher than expected.
However, no operating fund shows first-quarter spending over the 25% of the budget benchmark.
Similar to many Arizona cities, Yuma’s year-over-year spending will appear higher in fiscal year 2022 than last fiscal year due to the nature of cautious budgeting and spending done in fiscal year 2021 due to the pandemic, Allen explained.
Likewise, the enterprise funds, which include the water, wastewater and solid waste, indicate consistent revenue growth in the first quarter compared to last year; and spending levels are under 25% of the budget. In conclusion, Allen noted that under the current conditions, “there are no immediate indications in revenue or spending trends to warrant mitigating action to reduce or restrict expenditure budgets or city’s operations and services.”
However, he pointed out, like the rest of the nation, city staff members are concerned about potential disruptions in consumer consumption and the supply chain, in particular, materials and labor.
“Staying flexible and adaptable should assist the city in navigating these concerns, especially with the city’s capital improvement program,” Allen said.
“Management will continue monitoring revenues and
economic factors. Should any revenue trend or risk indicator signal an onset of materially adverse conditions that could be detrimental to the city’s financial condition, mitigating actions will be identified,” he added.
Shelton asked how staff anticipates disruptions to the supply chain might affect the city. City Administrator Phil Rodriguez noted that capital projects would be the most affected. If the city learns that certain items will become scarce, staff looks into alternatives to procuring those items. In some cases,
the council will need to give budgetary approval, especially if prices escalate beyond what staff had anticipated.
Among the community, staff has received the most feedback on construction costs. Some projects appear to be taking much longer than typical, a visible indicator of disruptions, Rodriguez said.
Although he noted that he can’t speak for all sectors, “two of the most prominent sectors, agriculture and military, seem to be operating well, especially now that a solution has been provided for opening the border back up and making that more accessible to labor.”