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Shop, restaurant tax revenue keeps Gilbert afloat
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Unlike its East Valley neighbors, Gilbert’s coffers seem to be holding their own against a slumping housing market, thanks to promising retail and restaurant sales tax revenue.
Retail and restaurant sales taxes are expected to bring in more than $29 million for the year — that’s nearly half of the $64 million in sales taxes the town expects to collect all year.
Sales tax collections from restaurants and bars are up about 14 percent over the same period last year, which sounds about right to Jeff Flancer, owner of Flancer’s Cafe in Gilbert.
Flancer’s business is up about 14 percent over last year.
That’s not unusual, he said, because his business tends to increase every year. But he’s not sure why consumers are going out to eat more often.
“I tend to think people are cutting back,” Flancer said. “People aren’t as free-spending.”
Nonconstruction sales taxes, especially retail, will factor greatly into Gilbert’s future budgets as the town’s home construction market diminishes as it reaches residential build-out.
But as retail sales tax revenue continues to be the town’s bread and butter, Gilbert will need a strong holiday shopping season to stay on track, officials said.
“It’s early in the year, and the projections seem to be holding,” said Marc Skocypec, assistant town manager. “Most of our local sales tax comes from retail, and retail’s big time is basically the holiday season.”
Retail sales taxes in July and August are running about even with the previous year.
But with the SanTan Village regional mall set to open this week, town officials are banking heavily on sharp increases in the retail category.
“The mall is going to be a huge component in our retail this year and in subsequent years,” Skocypec said.
That’s important as the town’s reliance on construction sales tax revenue is declining, he said. “As we reach build-out and construction activity falls off, that number will decline and needs to be replaced,” he said.
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