City’s pandemic financial hit not as bad as feared - SanTan Sun News SanTan Sun News

City’s pandemic financial hit not as bad as feared

September 8th, 2020 development
City’s pandemic financial hit not as bad as feared

BY Kevin Reagan
Staff Writer

New financial data show Chandler did not lose as much tax revenue as it expected because of the pandemic.

The city had been projecting a $10-million revenue hit during the last quarter of the 2019-2020 fiscal year, which ended in June – which would have brought the city’s total spending power down to $251 million.

But new tax data show the city ended the fiscal year by taking in about $259 million – meaning a revenue loss of only about $1.8 million.

Total losses attributed to COVID-19 were put at about $3.7 million, though that was offset by a sudden spike in building permit fees.

Although the city collected more sales tax revenue compared to the 2018-2019 fiscal year, Chandler still experienced a significant loss when businesses were shut down from mid-March to mid-May.

Monthly tax revenues had been steadily increasing by about 4 percent for most of the last fiscal year until they reverse around April — the same time most schools, restaurants, and public places had been forced to close.

“The increase represents the strong revenue growth we saw during the first three quarters of the year,” city officials wrote in a report, “but has been curtailed by the last quarter, which saw declines due to the economic pressures caused by COVID-19 closures.”

Sales tax revenue in May 2020 was about 10 percent less than what Chandler collected the previous year and June’s revenue experienced a 5-percent drop.

Before the city adopted its current budget for the 2020-2021 fiscal year, Chandler’s leaders began to curb spending.

City departments held off on filling vacant positions, employees were prohibited from making any traveling expenses and several spending requests were removed from the city’s latest budget.

“We pulled out a lot of those new requests and tried to keep the budget as even as possible,” said Dawn Lang, city management services director, during a public meeting in April.

A city spokesman said Chandler is continuing to spend under the conservative guidance Council gave when passing the city’s 2020-21 budget, which planned for a $20-million loss in expenditures and delayed several pricey capital projects until the end of the current fiscal year.

The pandemic appears to have had varying impacts on the city’s individual revenue sources with some experiencing dramatic losses and others reporting little to no impact.

Taxes collected from department stores increased by 6 percent between May and June, while grocery stores saw a 5-percent revenue loss during that same time frame.

Lodging taxes collected from hotels have experienced some of the biggest drops in revenue due to the pandemic – revenue in June fell 69 percent from the June 2019 total.

Taxes taken from local bars and restaurants in June was 20 percent less than the revenue in June 2019.

Taxes received through Chandler’s entertainment or amusement venues saw an even bigger drop with June’s revenue 58 percent below that of June 2019. 

July saw a slight uptick in tax revenue from restaurants and entertainment venues compared to June, but the total was significantly smaller than revenue gathered in previous years.

Chandler’s overall sales tax revenue for July – put at about $12 million – was 1 percent less than the previous year, but was still notably higher than the $10 million collected in July 2017.

Taxes from contracting and construction services started out this fiscal year nearly 44 percent lower than the previous year, which city officials said was expected due to a projected slowdown in activity around Chandler as it approaches build-out.

“This is mainly due to the completion or near completion of various major construction projects such as Intel, downtown construction, and various multi-family residential projects throughout the city,” a financial memo states.

Retail and rental properties are some of the few tax categories in Chandler to see positive growth over the last couple months.

Taxes taken from rentals were 6 percent higher in July than the previous year and retail tax revenue – the city’s largest tax category – saw a 14-percent increase.