Mayor urges ‘buy local’ as taxable sales dip

The question of where Carson City residents are buying their cars came up at a Chamber of Commerce meeting Thursday that focused on the city’s revenue streams and budget.

“Where are you buying your cars?” Mayor Lori Bagwell asked the audience while highlighting some recent data on taxable sales. “Carson City. Because that is what? Our number one sales tax base is the cars.”

Bagwell presented a taxable sales report for the month of February — and fiscal year to date — that is giving city leaders pause. The taxable sales in Carson City for February 2022 were nearly $121 million. This last February, taxable sales came in at about $110 million — an 8.7 percent decline. For the fiscal year to date, through February, taxable sales slipped from about $1.03 billion the prior year to about $1 billion this fiscal year — a 2.4 percent decrease.

Bagwell described how budgeting is a balancing act, looking at revenue figures and deciding if the data indicates a trend.

“I’m making less than I did the same month the year before,” she said. “Yikes. We’ve had a couple of months of going negative. I’m not sure when I’m going to decide, when we’re going to go, ‘Uh oh, now it’s a trend.’ Right?

“Can I weather one or two months out of 12 months? Because maybe another month is high, and another month is low. What I don’t like is a report that as I get further and further into the end of the fiscal year… my year-to-date is starting to be negative.”

Bagwell emphasized how much the city’s budget depends on sales taxes. Sales tax revenues are categorized as part of intergovernmental resources, which make up 24.7 percent of the city’s revenue. That compares to property taxes, which generate 16.7 percent of the city’s revenue, according to Bagwell.

The city’s total projected revenues for fiscal year 2024 are about $196 million, Bagwell pointed out. Nearly $60 million of that stem from proprietary funds that include charges for service, like for sewer or water. Revenue for the general fund, which covers basic governmental departments, are projected to be around $102 million.

Revenues from taxable sales arise from different kinds of business activities. Bagwell highlighted the top four categories that make up 58 percent of the city’s sales tax base. Motor vehicle and parts dealers is the top. In February, taxable sales for motor vehicle and parts dealers came in at roughly $29 million, a 16 percent drop from the previous year.

The other top revenue producers are general merchandise stores; food services and drinking places; and building material and garden equipment and supplies. Except for food services and drinking places, every top category declined in taxable sales in February compared to the previous year.

As Bagwell noted, some months are better than others, giving finance officials pause even if the data is short of an actual trend. One thing that people can do is keep dollars in the community, Bagwell maintained.

“Buy local. Buy local,” she urged chamber members.

Bagwell explained how many revenue sources are dedicated for certain purposes and can’t be used otherwise. Supervisors do have flexibility in the general fund. However, redirecting money from the general fund means taking it from other needs.

“We’re doing a balancing act of everything,” Bagwell said.

The board has been increasing the general fund’s ending fund balance in case of an economic downturn in the future. The projected ending fund balance in the general fund for the next fiscal year is about $9.9 million, or about 11 percent of expenditures. The board’s goal is to increase it every year until it reaches 16 percent of expenditures.

“I think your board is super responsible by saying we’re going to leave us some wiggle room to be able to respond to the cyclical taxes that happen,” Bagwell said. “Some believe we’re moving down right now, that things are going to be slow.”