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Peoria Experiences ‘Remarkable Growth’ in Revenues During Epidemic

The COVID-19 pandemic had a number of negative effects across the country, but Peoria’s local economy benefited from it, with increases in sales tax receipts, housing, and small company permits.

To take advantage of this, city officials will ask the council to authorize more than 35 new posts through a mid-year budget adjustment, most of which will be in public safety.

According to Peter Christensen, deputy finance director for budget and revenue, sales tax revenue accounts for roughly 37%, or $63.4 million, of Peoria’s general fund, or $168 million, which has benefited from a number of economic indicators throughout the epidemic.

Since the end of the Great Recession, the city has enjoyed steady growth in local tax revenues, which have increased by an average of 5.5 percent year over year during the last five years.

Because the finance department was unsure how the COVID-19 epidemic would influence the local economy, it made severe revenue changes to the budget, forecasting losses.

However, according to Christensen, the city had only two terrible months in March and April 2020. In reality, revenue increased by 7% in the fiscal year 2020, while the city had an “amazing growth” of 14% in the fiscal year 2021, over $21 million more than planned.

“We completely revised our budget as a result of those projections.” “At that time, we removed most continuing spending and began planning for mid-year budget cuts,” Christensen said. “Fortunately, those forecasts were never realized, and actuals turned out to be far better.”
Increases in sales taxes

When the pandemic struck in March 2020, sales tax receipts were down 5% from the previous year, and sales tax revenues were down 13% from the previous year in April 2020. A total of $1.5 million was lost as a result of the two declines.

Peoria’s monthly sales tax collections have been increasing by double digits each month since then, according to officials.

When the CARES Act was adopted in May 2020, according to Interim Public Works Director Kevin Burke, national consumer confidence stabilized.

The American Rescue Plan Act, which was passed earlier this year, infused $10.38 million into Peoria’s general fund, with $5 million set aside to assist individuals, families, and businesses badly affected by the pandemic. The remaining funds were utilized to compensate for revenue losses caused by the pandemic and are now available in the city’s general fund for one-time usage.

Consumer confidence has decreased in recent months as a result of inflation, according to Burke, but the city’s sales tax income is still increasing.

During the pandemic, the stimulus packages kept the Consumer Confidence Index high, enabling increased retail sales, a key economic indicator for the city.

Automobile sales, another important local indication, have also increased, according to officials.

In terms of revenue growth from automobile sales, Christensen said the city’s sales tax income receipts are the only hard statistics it has.

“I can only imagine that it’s because of the higher automobile costs,” he remarked.

In summation, Burke stated that Peoria’s key economic indicators are continuing to predict steady but solid growth in the future.

“The CCI is a story about stimulus packages,” says the author. “CARES got us through a year, and then ARPA came along and helped us go back to pre-pandemic levels,” he said. “What really drives our economy is consumer confidence.” People spend their money when they are confident in the economy, and when they spend their money, the economy moves, and everything appears to be productive.”

Revenue is expected to grow at a modest rate until the fiscal year 2027, according to finance department officials.

Compensation hikes and significant capital projects, on the other hand, will have an impact on spending in the future, according to Christensen.

“Over the next five years, we predict a positive gap between revenues and expenditures,” he stated. “In the coming years, that chasm will close.”

Other gaps created by the pandemic, according to economists, will close in the future.

States and cities like Peoria have benefited from high sales tax revenues, according to Danny Court, senior economist at Elliott D. Pollack & Company, but the effects of the stimulus packages and other relief will not last forever, and spending will shift back to hotels, services, and entertainment, as well as every other industry that was severely impacted by the pandemic.

Revenues will continue to increase at a high pace year over year in the future, he added, but it will likely slow to approximately 3-5 percent, which will still assist grow the base.

“When you see it at the state level, you know it’s happening in cities,” Court explained, “but each city captures different percentages.”

“The income gain was a pleasant surprise, but the trend line will return to normal in the next year or two.”

Positions in public safety

Deputy City Manager Andy Granger said the city is requesting a mid-year budget change to allow for 35 extra positions based on a positive Peoria projection.

Staff will seek these roles during a city council meeting in January, which will include 15 additional posts in both the police and fire-medical departments. This expansion in public safety posts includes the addition of a sixth ambulance, which will be staffed by six firefighters.

The city wants to add nine more rovers to the roster — four captains, one engineer, and four firemen — to assist minimize overtime in the fire-medical department.

Costs will be partially offset by overtime savings and ambulance revenue, according to Granger.

“Rovers are not assigned to a shift. He stated, “They are available for shifts to fill voids due to vacations and sick leave.” “Instead of requiring overtime, this will fill that gap.”
Staff will request a training officer and a lead equipment coordinator for the police department.

Personnel will request three detectives and three support staff, as well as six officers and one lieutenant for patrol services, due to an increase in the caseload of investigations.

“The officers would improve our proactivity time in the south,” according to Granger. “This is basically the free time when police aren’t attending to calls for service or preparing reports, and it allows them to perform enhanced community policing.” “It would allow for improved service calls and response times in the north.”

Growth in the commercial and residential sectors is continuing.
Partially due to the Taiwan Semiconductor Manufacturing Co. facility that recently broke work in north Phoenix, east of the city, the city has seen a revived interest in strategic parcels for economic growth.

According to Burke, supply chain firms are still looking for additional premises in the Vistancia commercial district and along Lake Pleasant Parkway.

He also stated that the city is on track to build 1,400 new homes this year, which is comparable with previous years.

Looking at the local home market, which has risen in the Phoenix area, you wouldn’t know there was a significant jolt to the economy, he said.

“Housing costs have risen more nationally and locally as a result of the pandemic,” Burke added.

Granger said the city’s development and engineering department is requesting three extra positions to help with residential and commercial plan review and plan review turnaround, as well as inspection monitoring on residential and commercial plan review because construction activity is still high.

“Development fees will help offset these costs,” Granger said.

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