FARMINGTON — The city of Farmington has closed its sixth year in a row with extra revenue, ending its last fiscal year with an almost $1.4 million surplus.
"And what's significant about that?" City Manager Rob Mayes said. "Keep in mind, during every one of those six years, our tax revenue is still lower than it was in (fiscal year 2009)."
After the fiscal year 2014 surplus, the city now has about $21 million in cash reserves, which is almost $14 million more than its cash reserves in fiscal year 2008, according to figures Mayes provided.
The city's fiscal year is from July to June.
But this year's reserves won't last long, Mayes said, because the state will begin reducing payments to cities and counties to compensate those governments for taxes they normally would have collected from food and medicine. These are called "hold harmless payments."
Since 2004, food and medicine sales have been tax exempt. To compensate, state lawmakers imposed a 0.5 percent increase on non-food item gross receipts taxes and began making hold harmless payments to cities and counties.
Farmington got $5.7 million in these payments in fiscal year 2013.
But in July 2015, the state will begin phasing out the hold harmless payment program by reducing its annual payments over a 15-year timeline. Once phased out, Farmington will lose about $5.7 million a year, Mayes said.
He said $5.7 million is 11 percent of the city's gross receipts taxes.
The city's cash reserves will now pay the anticipated losses for the first nine years the payments are phased out, he said.
"The hold harmless is a game changer for us," Mayes said. "It changes Farmington as we know it."
According to figures Mayes provided, Farmington's surplus in fiscal year 2013 was $2.4 million. It was $4.5 million in fiscal year 2012, $5.8 million in 2011, $973,000 in 2010 and $78,000 in 2009.
"I am extraordinarily pleased that we just closed out our (sixth) year in a row with balanced budgets and real cash surpluses during a time period where tax revenue remains significantly below where it was all the way back in (fiscal year) 2009," Mayes said in a written statement.