Slight dips forecast in Anderson tax revenues

Following more than 12 years of steady growth in Anderson's property and retail sales tax receipts, forecasts for slight reductions in both of those categories proved sobering to city officials during an hour-long workshop on the 2008-2009 biennial budget that preceded last week's council meeting.

"This will be the first actual decline in fiscal year over fiscal year since 1995-1996," warned City Manager Scott Morgan, who is predicting general fund revenues will top out at $5.53 million this year.

That amount represents a projected decline of 1.8 percent compared to actual revenues received in 2007-2008, Morgan said.

Extending his forecast out to the next two-year budget cycle, 2009-2011, Morgan said revenues in the first half of that budget will decline 3.6 percent to $5.33 million from this year's projected receipts, and another 1.7 percent to $5.24 million in the second half of the two-year cycle.

"While we are projecting some falloffs in revenues in light of the national, state and local economy, I wouldn't trade Anderson's place with any other city in the county," Morgan said in an attempt to bouy optimism.

"We'll have to do some tightening of the belt," Mayor Butch Schaefer said after Morgan completed his presentation. Schaefer's sentiment was echoed by James Yarbrough

Like most cities in California, Anderson's single largest contributor to general fund revenues is the city's share of state sales tax. Through a formula that Morgan described as "Byzantine at best," Morgan said the city receives one cent of the sales tax collected on items sold within city limits, plus a very small share of the accounts that are pooled countywide and statewide.

During fiscal year 2007-2008, the most recent year for which accurate records are available, nearly 43 percent of the city's general fund revenue came from the sales tax.

Forecasting sales tax revenues can be somewhat risky, Morgan allowed, noting that Anderson has at least two dealerships that sell high-ticket recreational vehicles - Anderson Campers RV celebrating 30 years at 6030 Hwy. 273 and Dan Gamel's Redding I-5 RV Center, established in May 2003 at 3750 Auto Mall Drive in Anderson.

"When the economy goes into decline, those are the kinds of things that are at risk since people can forego those types of expenditures. We could see some additional losses in sales tax revenue if one or both of those businesses are unable to continue," Morgan said.

However, Morgan has accurately predicted sales tax revenues in seven out of the last 10 years.

With that track record behind him, Morgan is projecting that Anderson will see a 1.7 percent decline in sales tax revenues in 2009-2010 and a further decline of 3.2 percent in 2010-2011.

Also expected to drop slightly are the city's share of property tax revenues as commercial property owners take advantage of re-valuations to reduce their tax load.

Since Anderson only sees 12 cents of each dollar paid in property taxes - schools garnering the largest portion of those collected funds while the state and Shasta County each get the next largest share - Morgan is expecting a 3.6 percent reduction or $1.585 million in property tax revenues during 2009-2010 and another nearly 1 percent drop to $1.57 million in 2010-2011.

Together, the two revenue sources equal almost 71 percent of the city's general fund revenues.

A much smaller share of general fund revenues comes from the city's transient occupancy tax, also known as the hotel bed tax, assessed at a rate of 10 percent. Due to the opening in May 2008 of the Gaia Anderson Hotel, the city's share of this tax rose to $345,000 in 2008-2009, and is expected to remain fairly flat during the next two years, Morgan noted.

The council will consider Morgan's projections as it creates the city's 2009-2011 budget, Schaefer said.