Finance director: Fountain Hills Q2 revenues down year-over-year but exceed conservative projections

Fountain Hills — Finance Director Paul presented the town’s FY26 second‑quarter revenue update on Feb. 3, reporting total net taxable activity of about $167 million, a 7% decline from the prior-year quarter, and total transaction privilege tax (TPT) receipts of about $4.8 million, a 4% decline year‑over‑year but 6.2% above conservative projections.

Paul attributed much of the year‑over‑year decline to the removal of residential rental taxes from the comparable quarter last year. Category performance was mixed: retail sales rose modestly to about $2.65 million and were 1.5% above projections; remote sellers (online marketplaces) produced roughly $541,000 for the quarter, an increase of about 15% versus the prior-year quarter; construction sales tax receipts were $705,000 (about 5% below last year but roughly 20% above projections for the quarter); restaurants and bars returned about $341,000 (roughly 3% above last year and well above projections); and services (including hotels, golf and vacation rentals) were $537,000 (about 4% below prior year but above projections overall).

Paul also noted state-shared sales-tax distributions are being affected by the San Tan Valley incorporation. The town collected approximately $880,000 in state-shared sales-tax during the quarter; staff estimate San Tan Valley’s incorporation will reduce Fountain Hills’ slice of the statewide pool by roughly $6,000 per month for sales-tax sharing and about $6,000–$7,000 from HEERF‑style distributions for the period in question.

Council members asked clarifying questions about retail-sector outreach and what the town is doing to support local merchants in the face of increased online sales. Staff described ongoing downtown marketing, partnership with the chamber of commerce and event-driven promotion as tools to drive in-person retail activity.

Paul said staff will present FY27 revenue projections at the upcoming budget retreat and will continue monitoring categories that are trending down. No formal action was required; the presentation was informational.