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Not so bad: Scottsdale officials pleased with July revenue

Posted 9/3/20

Scottsdale’s top financial expert is pleased with the city’s funds as the new fiscal year kicks off — despite declines from COVID-19 — a new report illustrates.

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Government

Not so bad: Scottsdale officials pleased with July revenue

Posted

Scottsdale’s top financial expert is pleased with the city’s funds as the new fiscal year kicks off — despite declines from COVID-19 — a new report illustrates.

Acting City Treasurer Jeff Nichols says city’s revenue sources did better than expected during July. Meanwhile, hundreds of thousands of dollars have been spent mostly on overtime costs associated with infected COVID-19 employees in the fire department.

Mr. Nichols, who is set to retire soon, provided an overview of monthly finances to Scottsdale City Council during an Aug. 25 meeting. The presentation is part of a monthly overview, which has drawn greater interest now that COVID-19 has financially impacted the municipality.

“The bottom line — one month does not a trend make — but beginning of fiscal year with a $4.9 million favorable variance, budget to actual, is better than any alternative that I expected,” Mr. Nichols said.

“I think we’re doing very well on the revenue side, and we’re holding expenses down. Both of those are having a positive impact.”

City revenue for July 2020 totaled $28.4 million.

Numbers show local taxes accrued about $12.1 million, compared with last year’s $15.8 million. The city budgeted $9.7 million.

Mr. Nichols also pointed out a positive variance of $1.2 million in state-shared revenues. After budgeting for $5.7 million, numbers show state-shared revenue totaled $6.9 million.

“This is primarily due to better-than-expected state-shared sales taxes — we’re experiencing better than we projected, and greater-than-expected auto lieu tax that they share with us due to increased automobile sales.”

Of the general fund operating sources, comprised of 1% sales taxes, seven out of the 10 revenue categories had positive variances.

Construction, Mr. Nichols says, had unexpected activity leading to tax dollars for Scottsdale.

“One good sign for dining and entertainment, the restaurants seem to be doing better than we anticipated with the reduced seating capacity and the takeout,” Mr. Nichols said.

“You look at food stores, if any of you venture out, I know my Fry’s when I go to the store, seems to be always busy. We’re seeing increased sales taxes from the people shopping at the food stores because they’re cooking more at home; kids staying home; people working from home.”

Another trend Mr. Nichols pointed out is an increase in short-term rental properties being booked, although he didn’t provide details on what type of increase is being experienced.

Declines in city revenue come from rental and utilities taxes, which Mr. Nichols called a slight decrease.

In personnel services, the city paid $200,000 in overtime costs, mostly to the fire department because of COVID-19.

“There’s been, I believe the numbers are 156 have been tested. It’s in the tens — probably 30 to 40 people, out of those 150-some-odd people have tested positive,” Mr. Nichols said of fire department employees. “When they do that, they’ve got to stay home, they have to self quarantine, and we’ve got to fill those seats. We have to call people in on overtime. This is not unexpected, and as a matter of fact the city manager has set aside some of the funds we received in the Cares Act for this impact.”

Inside city operations

During the second part of the monthly financial study, City Manager Jim Thompson says reductions to costs when COVID-19 first began affecting Arizona, has allowed for a successful fiscal year end on June 30.

For fiscal year 2020-21, which began on July 1, the city is at a $5.4 million positive variance, for the first part of the year.

On the expenditure side, the fire department overtime costs are in part causing a negative variance of about $500,000.

“In particular, in public safety, with other issues we had such as protests and other things that we wanted to ensure we had adequate resources on duty and on staff. There is an expense to each one of those,” Mr. Thompson said.

“We’re slightly over on our uses, but please note the difference between sources and uses, budget to actual, is still a $4.9 [million] positive.”

Mr. Thompson says city revenues at this time are better than expected, and expenditures are as expected.

“We’ve also had some brush fires this last month, we had to assign personnel to that. We also have to have coverage of the city, so we had additional resources assigned to that. As well as we had a couple of additional protests we had to staff up for,” Mr. Thompson explained of the increased expenditures.

“And then, any of the exposures with COVID-19, we have to ensure we have coverage in all areas of essential services so, again, if we have somebody out we have to bring individuals in on a cost basis to cover those required essential services.”

In response to the current COVID-19 conditions, Mr. Thompson says Scottsdale brought back some staff in frozen positions to reopen facilities earlier than expected.

Mr. Thompson teased a September presentation about the changes made, and things done, to address COVID-19.

“Staff has gone above and beyond in almost all situations. We still have our regular duties that we have to perform, but then we also have all the pandemic and all of the other crises we’ve had to face this year for various social unrest. We continue to provide the same level of service, in some areas a different level, but in some cases a better level of service,” Mr. Thompson said.

“I’m very proud of that because we have been able to deliver services to our residents in different ways that many other communities are not providing those services currently.”