City's February sales tax revenue down

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In other action

At its Tuesday meeting, the Craig City Council:

• Approved, 5-0, purchasing two pickups from Craig for $33,221, one for the road and bridge department and one for parks and recreation. The city did not open a bid process but used bids submitted for a similar purchase in February when Craig Ford had the low bid.

• Approved, 5-0, a site plan for a retail development on First Street by Lonnie and Lorraine Kawcak, and a site plan for an addition to The Journey at First Baptist Chruch at 1150 W. Ninth St.

• Approved, 5-0, a $45,110 bid from Pitt Roofing & Construction, based in Vernal, Utah, for a new adhesive-bonded roof for all wastewater plant buildings. It was the lowest bid submitted for that construction type and included a 30-year warranty.

— After an encouraging holiday season, sales tax revenue is once again slumping in the city of Craig.

Craig received a total of $350,203 in February between its own tax and the city's share of county taxes. Combined, that is $7,279 less than it budgeted for the two revenue streams, or about a 2 percent loss.

Sales tax, which directly represents consumer activity, generally is considered a reliable indicator for the health of the overall economy. It also is a vital revenue source for the city.

February's returns dimmed what was a brighter beginning to 2009. January sales tax revenue came in more than budgeted across the board.

As it stands, the city still is ahead of budget for the year, but just barely. Through two months, it has collected $271 more than projected.

February's negative budget numbers came after city officials already held back their 2009 revenue projections because of fears about the national recession. The city budgeted for no growth from 2008, in effect hoping to keep what it already had, Craig Finance Director Bruce Nelson said.

Nelson presented the data to the Craig City Council at its Tuesday meeting. Mayor Don Jones said the issue would be something to watch, but noted the city had similar troubles in a few months of 2008 and finished the year with a surplus.

However, a dip in sales taxes could have appreciable consequences for the city, which depends on sales tax to make up about 52 percent of its general fund.

Sales tax is such a large part of the general fund, it generates about four times as much revenue as property taxes, the second-biggest funding source.

"The numbers are close. Very close," Nelson said.

However, two months is too small of a sample size to see a trend or be concerned for the rest of the year, he added. It's also not unusual to see sales tax peak one month and bottom out the next because of its natural volatility.

Craig City Manager Jim Ferree said he also isn't alarmed but plans to keep a close eye on revenue, like always.

"The way those collections go up and down, it's hard to say what's going to happen," he said.

Ferree said the city could spend reserves to absorb some losses but would have to make spending cuts if revenue dipped more than $200,000 or $300,000 below budget projections.

In that case, officials would look to cut operating expenses and capital projects, such as planned improvements to roads and water lines, or an anticipated remodel to Craig City Hall.

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