With town staff monitoring finances carefully through the pandemic-induced economic downturn, revenues for the first quarter of the 20/21 fiscal year are headed in the positive direction after an upbeat finish to last fiscal year.

Town Finance Director David Pock presented his first quarter update at the regular Town Council session Oct. 20. It covers the months of July through September.

The report focused on revenue only with no update on expenditures. Pock said expenditures are not budgeted month to month.

“Revenue collection for the first quarter is encouraging and exceeded budget expectations by $825,000,” Pock told the council. “Most TPT (sales tax) categories are outperforming last year (first quarter).”

He added that state shared revenues are down slightly, but within an acceptable range.

“Staff remains optimistic that collections will continue to strengthen as economic uncertainty related to COVID-19 and the election decreases,” Pock continued.

Pock said the net taxable activity for Fountain Hills in the first quarter was $125 million, an increase of $22 million compared to last fiscal year.

The town collected $3.43 million in sales tax compared to $2.65 million planned in the budget. That is approximately $780,000 more than anticipated. That is an increase of $860,000 compared to first quarter last year.

Pock noted that $340,000 of the improvement can be attributed to the local sales tax increase of .3 percent that took effect last fall.

Pock said another key factor to be considered is that the new year includes use tax and online sales tax that were not collected a year ago. Retail sales tax collection is up $655,000 over first quarter last year, $1.88 million compared to $1.22 last year. That is $545,000 more than planned for.

Construction sales tax revenue is also running ahead of expectations. The town collected $505,000 the first quarter compared to $380,000 that was anticipated in the budget. That is an increase of $120,000 over last year.

Pock reported that sales taxes from the utilities and communications category almost never vary year to year. However, for the first quarter the town had an increase of $83,000 over the first quarter a year ago. The town received $185,000 more than expected.

Pock said he believes that may be an effect of the pandemic and increased internet use with people working from home and increased use of television viewing services.

Sales tax revenues from restaurants and bars were not what was anticipated in the first quarter. Staff did budget sparingly due to the pandemic, however revenues came in $35,000 below budget, collecting $185,000 compared to an expected $220,000.

The revenues from restaurants and bars did show a steady but small increase over a year ago in August and September.

The revenues from the services sector were also below expectations. This includes much of the tourism business. The town had budgeted $250,000 in revenue, but collected $170,000. That is $80,000 less than expected but and increase of $21,000 from a year ago.

The state shared portion of the sales tax revenue is also down for the first quarter. Staff had expected to collect $705,000 and received $650,000.

The vehicle license tax portion of the state shared revenues was higher than expected with the town receiving $330,000 compared to budgeting $290,000.

The Highway User Revenue Fund (HURF) is also running behind anticipated revenues by just $15,000.

Pock said he will be back to the council at its Nov. 17 regular session to discuss a couple of items, including adjustments to the Capital Improvement Plan and a cost of living adjustment in the budget for implementation of January 2021.