As budget slumps, City Hall prays for rail

TEMPE — City officials are considering cutting city services and tapping $2 million from Tempe’s “rainy day” fund to offset lagging sales tax revenues brought on by the economic tailspin.

The move is largely driven by people’s current spending habits, which does not include things like cars, houses and furniture – the bread and butter items that brought millions of dollars in taxes into city coffers each year.

Cecilia Robles, Tempe’s deputy Financial Services manager, says the decline in sales tax revenue creates a “domino effect” that impacts City Hall. In August, revenues from car sales had dropped 36 percent and furniture sales dropped 11 percent over the prior year, she in a recent interview.

Together, these two sets of consumer goods make up $4 out of every $10 in sales tax revenues that the city receives.

The result is a budget shortfall. Robles told the City Council in mid-September that if the fiscal year ended that day, the city would face a $12 million shortfall.

Councilwoman Onnie Shekerjian said spending has “gotten out of control” and urged city staff to “sharpen our pens.”

One bright spot might be the light rail project, Robles said. Rail officials project it will shuttle 26,000 riders around in 2009, and Robles said this could lead to an influx of new shoppers – and thus, more tax revenues – in Tempe.

She also mentioned that Centerpoint Condominiums will also help by bringing more residents to Downtown Tempe.

= = =

>>Email the editor at aklaw@zoniereport.com.