Despite stay-at-home orders in full effect for the entire month, Lake Havasu City’s April sale tax revenues have basically remained flat from 2019 and avoided the steep drop off that city officials had feared. At the same time, the city’s portion of the Highway Users Revenue Fund plummeted by more than 25 percent which could cause issues with planned road maintenance projects down the road.
The city released its monthly transaction privilege tax report on Monday which detailed Lake Havasu City’s major revenues during the month of April. According to the report, Havasu was given an additional $111,670.10 by the state in error, which will be recouped in the next month. The $2,176,446 actually generated through sales tax in the city is about 8.6 percent below what was budgeted and 4.4 percent below April 2019.
City Manager Jess Knudson said the sales tax numbers in Lake Havasu City are better than what the State of Arizona as a whole, and many individual cities and towns are seeing during the health crisis.
“With Havasu being a tourist destination, the tourism numbers remaining strong over the past two months has had a positive impact on the local economy,” he said. “We are pleasantly surprised. We expected that number to be much lower than what we are seeing here. So that is good news in terms of the city’s finances. However, the concerning news is the 25.5% decrease in HURF funding, which is substantial.”
The Highway Users Revenue Fund generates money through taxing motor vehicle fuels, as well as a variety of fees and charges related to registering and operating a vehicle. Some of the money collected by the state is then passed on to local entities. Lake Havasu City’s share of HURF in April was just $350,269 which was about $120,000 less than in 2019, representing a decrease of 25.5%. It was also 27.5% less than was budgeted.
Knudson said HURF money is used to pay for personnel, equipment, and projects on roads and right of ways.
“We will have to take a really close look at that,” Knudson said. “We had been looking at alternatives to a couple different projects including chip seal, we looked at a project for some roadwork in the downtown area on McCulloch. So if these numbers don’t balance out over the course of 12 months then there are going to have to be some cuts to some projects.”
According to the report, the HURF fund is 4 percent above budget, and 4.6 percent above 2019.
Lake Havasu City saw a big 45.5% drop in both its bed tax, and its restaurant and bar tax revenues in April. For the year as a whole, the 1% restaurant and bar tax is 5.6% below 2019’s pace, but the bed tax has brought in 1.4% more so far in 2020. Knudson pointed out that the better-than-expected sales tax numbers help to offset the revenue decreases to both the additional taxes.
The drop in funding could affect Go Lake Havasu, however, which is paid 75% of the city’s bed tax and restaurant and bar tax revenues. The Partnership for Economic Development was previously paid the other 25% of those revenues, but their contract was altered earlier this year so they are paid $500,000 annually, rather than a percentage of the revenues.
Retail sales by category
According to the report, revenue from retail sales increased by 9.9% in April 2020, compared to 2019. The largest single increase by percentage was for non-store retailers which increased by 115.5%. Building materials, lawn and garden jumped 31%, food and beverage stores went up 12.6% and home furnishing and appliances bumped up 0.4%. The “other” category also rose 18.5%.
But not all retail went up in April this year. Brick and mortar retail stores saw a 13% drop, and motor vehicle and parts also fell 10.4%.