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Havasu’s sales tax revenues breaking records again

Lake Havasu City’s sales tax revenues set a new record high last fiscal year for the second year in a row.

According to the Arizona Department of Revenue’s most recent monthly report, Havasu received a total of $38,965,540 in sales tax revenue in Fiscal Year 2021-22 through its 2% city sales tax, its 3% bed tax, and its 1% food and beverage tax. That is $3.55 million more than the city’s previous record, which was set in FY2020-21.

A year-over-year increase in sales tax revenue is nothing new for the city. Havasu’s sales taxes have steadily produced more revenue each year since FY2010-11, immediately after revenues plummeted when the housing bubble burst in the early 2000s.

But the steady climb turned into a surge a few months into the covid pandemic, leading to an incredible 25.2% increase in sales tax collections in FY2020-21 compared to the previous year. That trajectory seems to have slowed back down in FY2021-22, reverting closer to pre-pandemic norms with an increase of 10.0% over the prior year. From FY2013 to FY2020, the city saw annual increases in sales tax revenue between 4% and 11.4% each year.

The vast majority of Lake Havasu City’s sales tax revenue comes from its 2% city sales tax, which produced a total of $34.7 million in FY21-22. That is a 10.1% increase over the previous year. The 1% restaurant and bar tax was also up 10.1% year-over-year, bringing in a total of $1.9 million while the 3% hotel/motel tax was up 8.5% from FY20-21 to $2.3 million.

Businesses produced a combined $3,458,664 in sales tax locally in June, which is 5.9% more than in June 2021. Havasu produced more sales tax revenue each month last fiscal year than it did in the same month the year before.

Nearly every sector of Havasu’s economy produced more sales tax in FY2021-22 than the previous year. The only exception being communications and utilities, which brought in about $75,000 less last year than the year before for a decline of 16.7% overall.

Sales tax revenue from the “other” category saw the largest increase by percentage from FY21 to FY22, up 32.2% ($68,000 more than in FY21). The use tax also had a big increase of 25.5%, bringing in about $465,000 more in FY22. Construction was up 22.4% ($641,000), the retail market place increased 20.5% ($345,000), restaurants and bars produced 12.1% ($625,000) more sales tax, followed by an 8.9% increase from accommodations ($319,000). Rental, leasing and licenses also ticked up slightly by 1.1% from the previous year – and increase of about $7,500.

Retail sales are by far the largest single category in Havasu. Sales tax revenues from that sector were up 6.1% in FY22 from the previous year, which is an increase of about $1.16 million.

In June, Havasu’s retail industry produced $1,891,429 which is a 2.8% increase compared to June 2021. But Havasu’s largest retail category – motor vehicle & parts – was down 2.7% from the same month in 2021. Revenue in June 2022 from food and beverage stores was also down 1.4% from the previous June while brick and mortar retail stores were down 0.4%.

Home furnishings and appliances saw the largest increase in June 2022 compared to June 2021 with a 16.1% jump. Building materials, lawn and garden was up 13.5%, the “other” category increased 6.9%, and online retail was up 4.3%.

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