Farmington's total tax revenue for this month is about 1.14 percent above what was budgeted, said Andy Mason, administrative services department director.
The improvement does not bring the city out of its recession, but should be recognized as a positive development, Mayor Tommy Roberts said.
"We're in a wait-and-see mode," said Mayor Tommy Roberts. "But I'm pleased at least to see (the improvement)."
The $5 million in total collections is a significant development, he said.
"That's a milestone," Roberts said. "It's been a while. We have to look at it and say it was a good month."
February's tax figures boosted the city's tax revenue from 3.7 below budget for the fiscal year — July 2012 to June 2013 — to 3 percent below budget, said City Manager Rob Mayes.
The city's budget deficit will be manageable without any cuts to service or personnel if it remains at less than 4 percent, he said.
"It's actually something we can manage," said City Councilman Dan Darnell.
Although the city's finances improved, the report showed that tax collections in the retail sector had slumped, he said.
February's gross-receipts tax report reflects taxes collected in December 2012. The numbers are about 60 days behind because businesses submit the taxes to the state Taxation and Revenue Department, which processes those collections and redistributes them to local governments throughout New Mexico.
Other sectors such as construction helped to bolster the city's tax revenue in spite of the decrease in retail collections, Darnell said.
"I was disappointed, but (total collections) are certainly trending in the right direction," he said.
For now, Darnell said he is taking a cautious approach.
"Time will tell," he said. "The next (gross receipts tax) report will be a little more telling."