East Valley communities see jump in tax collections - East Valley Tribune: Chandler

East Valley communities see jump in tax collections

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Posted: Saturday, December 3, 2011 1:00 pm | Updated: 6:24 am, Mon Dec 5, 2011.

When Intel announced plans in February for a billion-dollar plus construction project on its Chandler campus, there were promises of financial gain for the community.

Recent tax revenue reports show that's what happened.

Every month for the last 19 months, Chandler has seen a year-over-year increase in tax collections. Big jumps are in hotel/motel tax collections and contracting, which includes construction, said Dennis Strachota, management services director for city of Chandler.

In fact, all of the East Valley's big communities are seeing increases in tax collections over last fiscal year.

In Chandler, hotel/motel tax revenues are up nearly 60 percent over first quarter last year. Contracting tax collections, which include construction, are up nearly 70 percent over year.

Construction management groups overseeing the Intel project often use the local hotels and motels for meetings when they come into town, Strachota said, prompting much of the jump. Then there are all the materials needed for the project and the individual spending by those building the plant.

"You've got 400-plus construction workers out there," he said. "Even with the construction workers you're going to have a spike as a result of food and restaurant increases. That's inevitable.

"You have contracting sales going up, retail going up (each of the last four months)."

During the last 20 months of tax collections, most increases have been in the 6 percent to 7 percent range. But recently, some areas are doubling that and more.

"We did expect an increase. We didn't expect it to be this much," Strachota said. "We're definitely running well ahead of budget for sales tax revenue."

But Strachota cautions having too much optimism because the economy was down so much and many of the purchases going on surrounding the Intel project won't stick around forever.

"When you have a huge construction project like Intel, that's going to last just two years. Unless there's something else to come along to replace it, we're going to see the growth in that go down," he said.

Other East Valley communities are also seeing tax collection increases this year.

Mesa is up 3.9 percent over last year in year-to-date reporting, and that was prior to November's Black Friday shopping spree by consumers, said Candace Cannistraro, the city's budget director.

The National Retail Federation reports the average shopper spent $398.62 during the Black Friday weekend, up from $365.34 last year.

"Obviously, we're hoping it's the beginning of the economic recovery," Cannistraro said. "The recovery is still going to be long and slow, but this year is showing that the recovery has begun."

Mesa is seeing its biggest jump in contracting tax collections - 22.9 percent up over the first four months of last year, according to a September report. Mesa's tax collection reports typically come out two months after the fact. So overall numbers may climb even higher early next year.

Gilbert saw a 6.1 percent increase in the most recent fiscal quarter over the first quarter of last year. Retail saw an 8.5 percent jump and construction saw a 7.9 percent jump during that same time period, said Dawn Irvine, budget administrator for the Town of Gilbert.

"We know tax revenues are starting to recover. We're cautiously optimistic about that," she said.

Still, the community has seen a tremendous shift in where collections are coming in. In 2005-2006, construction-related sales tax revenues accounted for $19 million.

"Now we're down to about $5 million," she said. "We expect construction sales tax will stay low. We're approaching build out.

"Our retail is starting to recover. That's where we're encouraged. It's becoming consistent to a much more sustainable level."

Not to be left out, Tempe saw a 9.3 percent increase in tax collections for the first quarter of the fiscal year over last year's first quarter. Part of the jump Tempe saw can be attributed to three months of collections for its temporary sales tax this fiscal year versus two months of collections last fiscal year, said Ken Jones, Tempe's finance and technology director. The city estimates tax revenues would have been up still - 4.6 percent - without the temporary sales tax.

But still, it's right on track.

"We are exactly on budget right now. The increases we're seeing coincide with what we have budgeted," Jones said. "We expect the increases we've seen in the first quarter to continue to play out for the rest of the year."

Unlike some of its neighbors, Tempe is seeing its large tax collection increases in automobile sales and restaurant activity.

• Contact writer: (480) 898-6549 or mreese@evtrib.com


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