Usually when you predict something and are proven to be off a few bucks, you don’t talk about it, but that is not the case with Portsmouth City Auditor Trent Williams who is all smiles since the revenue from the newly-enacted income tax increase is more than he had forecast.
The new half-a-percent increase brought in $2,142,149 in 2016. He had projected the revenue would be $2,050,000, so the real total exceeded his expectations by $92,149. For the month of December, the tax produced revenues of $195,432.
Williams explained the city’s good fortune in an exclusive interview with the Daily Times.
“At this point in the year, just through January, the new income tax is up almost entirely due to this being the first full year with the new rate. As the new tax rate just began in January of last year, some of the revenue from the first quarter of 2016 was still being collected at the previous rate,” Williams said. “So for the first few months of this year, we are only able to compare a blended rate of the old 2.0 percent to the new 2.5 percent rate. It will only be after the completion of the second year at the full rate that we will have apples to apples comparison.”
Williams said the total General fund income tax revenue for January 2017 was up over last January by $447,879, with $304,760 coming from the new rate. This means that for this month, the general fund income tax revenue was up $143,209 without the increased rate.
“This is certainly an encouraging sign, but we’re only one month into the year. The new rate brought in $2,142,149 in 2016, which was above my conservative estimate of $2,050,000 by $92,149,” Williams said. “It needs to remain above last year by at least its current $447,879 to meet my estimate this year of $2,500,000. I am optimistic at this point that it will. Anything above this estimate and I would be very pleased.”
As far as continuing to maintain positive balances in all funds, except the sewer fund, Williams says there is one simple equation that makes it work. Increase revenue and decrease expense.
“I think much of this is attributable to utilizing proper budgeting practices and setting and developing minimum fund reserve balance goals. Obviously, the increased tax revenue has been a major factor, especially with the General fund,” Williams said. “The City Manager has created and submitted solid budget plans that have been approved by City Council. Along with this, we have set minimum fund balance policies and continue to work toward maintaining these goals, increasing reserves and returning the city to fiscal stability.”
Reach Frank Lewis at 740-353-3101, ext. 1928, or on Twitter @franklewis.