Spartanburg, S.C., expects fees, taxes to come in lower than projected

Lynne P. Shackleford

Oct. 27, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- City staff expects business license fees, and property and hospitality taxes to come in lower than projected because of a difficult economy.

City Budget and Accounting Director James Kennedy told council during its meeting Monday that hospitality tax revenues -- the 2 percent tax on all prepared food inside the city -- were budgeted at $3.3 million with $60,000 in interest earnings projected. With collections for July and August lagging projections, annual revenues are expected to come in about $75,912 below budget for the year. The city typically collects 16 percent of its annual hospitality taxes during July and August.

Interest revenue projections should be lowered from $60,000 to $20,000, with a combined total revenue shortfall of $116,000, Kennedy said. The shortfall will be financed from the hospitality fund, which has a $742,000 balance after $161,163 was transferred out to cover it.

Kennedy said operating expenses are under budget for the first quarter of the fiscal year, with most of the savings in personnel costs. Staff is working to implement cost-saving measures toward a minimum of $300,000 in additional cost reductions.

Kennedy said expenses for SPARTA -- the city's transit system -- and the Spartanburg Downtown Memorial Airport are expected to exceed budget, and staff is appropriating $300,000 in additional money to compensate for the shortfall. Council and staff also will review transit routes and make changes to reduce costs. Staff also is renegotiating the SPARTA management contract.

Staff expects that property taxes will come in about $120,000 less than initially budgeted, and the city likely will receive $367,500 less than first anticipated. The insurance business tax is expected to come in about $150,000 less than first projected. City Manager Ed Memmott told council the St. John Street parking garage project budget has been reduced from $15 million to $11.1 million because of lower construction costs. Staff has reallocated the savings for other projects.

Newstex ID: KRTB-0183-39283471