County revenues up, but so is inflation

Board of supervisors receives budget update

For the first six months of the last four years, Yuma County revenues have trended upwards in all categories, including property taxes, state shared sales taxes and county sales taxes.

This year is no different. Tax collections are higher than the previous year. In some ways, it’s a trade off because some of the county’s expenses have also gone up due to inflation.

On Wednesday, Tony Struck, budget director, gave the Board of Supervisors a budget update for the first half of the fiscal year 2022-23, which runs from July to December. He touched on a number of topics, including inflation that impacts operations general fund revenues and expenditures.

Inflation for the 12 months ending in January was 6.4% over the prior year, which was 7.5%. The high over the last year, which hit in June, was 9.1%.

For food, the consumer price index shows a 10.10% increase over the prior year, which had an increase of 7%. The cost of food hit a high of 11.4% in August of last year. Over several years, that’s about a 17% increase.

For all items, the consumer price index increased by 6.4% in January 2023. Last year, it was 7.5%. Over the last two years, the compounded increase is almost 14%.

Struck also reviewed the increasing costs for “things that affect the community,” such as electricity prices (11.9%), food prices at home (11.3%) and away from home (8.2%) and shelter prices (7.9%).

New vehicles, which are still higher at 5.8%, are lower than all items and have been trending down, “which is good for our fleet operations,” Struck noted.

Gasoline, which increased by 1.5% last year, was still high but “trending in a positive way and that’s having an impact on operations as well,” he added.

Struck also compared the revenue budget, based on what county staff anticipated would be collected

in taxes, to the actual tax collections. All revenues are exceeding expectations.

“I would expect property tax revenues to be at 58.8% of collected, and we’re actually exceeding that (by 1.7%),” Struck said. “The vehicle license tax, stat eshared taxes, the county sales taxes all are trending well above what we had expected at this point.”

In addition, the county received a refund of $1.4 million from the Arizona Long Term Care System, which helps fixed-income seniors and others. “We overpaid the federal government-subsidized ALTCS program, and they’re required to refund back contributions. So we got that $1.4 million back refund,” he noted.

The only revenues falling behind are court fines and forfeitures. The Justice of the Peace Court 1 is trending above budget, but all the others are falling short.

Due to climbing interest rates, the county investments are earning “well above our budget, and we’ve actually exceeded our interest on the investment budget for the year during the first half of the year.”

In January, the Arizona Joint Legislative Budget Committee updated projections for sales taxes. In October, it anticipated the year would end 5.9% above the prior year. Sales taxes have actually increased by 7%.

“It’s been a little bit more positive than what they thought so they enhanced that,” Struck said.

For next year, he added, the state committee is forecasting a 2.8% increase in sales taxes, and with continued economic recovery over the next two years, it expects hikes of 4% or 5% in sales taxes.

Last year, Yuma County ended up almost 14% higher over the prior year for retail and remote sales. This year the county is down to 6.4%, showing a “softening in the retail sales side of things,” Struck explained. However, he noted, “contracting is still growing primarily due to inflation, I believe.”

While the county Budget Office tries to project trends, vehicle license taxes are “kind of hard to predict,” Struck noted. “It’s really tough to really get a good grasp on how that’s going to end up, but we are trending above budget. I think we’re about 4.4% above the prior year on vehicle license taxes.”

As for county sales taxes, collections are trending above the budget. In 2021, the pandemic year, Yuma County hit a large surplus towards the end of the year, higher than expected.

“And then we’ve actually increased our total sales taxes over the last two years. This is really our new baseline going forward,” Struck said.

On the retail side of things, contractors have had a couple of good years. Restaurants and bars taxes, because of inflation and people eating out, have increased more than expected. And this year, the county has a new category, remote sales.

As for expenditures, the Supplies and Services category increased slightly. Some of those increases are due to things like 17 new full-time employees, $100,000 more in postage because of the election and a $600,000 hike to ALTCS.

In general fund expenditures, the county had a 5% increase to the pay scale, supported by a number of market studies. However, personnel is now trending down primarily due to a 13% vacancy rate, or about 92 unfilled positions.

The departments with vacant positions include Legal, which is about half a million dollars below budget, Sheriff’s Office, which is down about $250,000, and Courts, which has a budget for attorneys down $400,000. To help fill positions in the Legal Department, the county recently increased the pay scale.

“With full staffing, you wouldn’t be under budget. I just don’t want to give the impression to any department that they’re under budget. They need more employees. They need to fill those positions,” Supervisor Tony Reyes said. “The Sheriff’s Department, for example, if they had every officer they want, if they had every detention officer they want, they wouldn’t be under budget. They would be fully staffed and up to budget. Because when we budget, we budget for every position to be full. And attribution, people retire, people move on.

“It’s very difficult, especially in the law enforcement field, to be competitive, because we’ve got so many other agencies just stealing your officers as soon as they become trained, they become more valuable for someone else. It’s really difficult. I feel like we’re like the greyhound, always following the rabbit,” Reyes added.

Struck pointed out that the supervisors just approved incentive pay for the Sheriff’s Office “so that’ll have an impact on the rest of the year as well.”

Not many other things are above the expected benchmarks. Fuel and Oil, at $25,000, “is not significant, but a little bit higher than what we’d expected,” Struck said.