RTA sees ‘unprecedented’ tax collections during pandemic year

The Regional Transportation Authority’s 20-year transportation plan is partially funded by a transaction privilege tax, or sales tax, so when the pandemic hit and businesses shuttered, low revenue was almost a given.

That is, until businesses started to reopen and tax collections began to climb in surprising ways.

“We had anticipated very poor revenues as a result of the pandemic and, in fact, we saw quite the opposite,” said RTA Deputy Director Jim DeGrood.

Of course, March and April 2020 saw a dramatic dip when stay-at-home orders impacted most businesses. But by July 2020, people were already spending money again, DeGrood said.

One area of surprising revenue collection is the hospitality category, which includes amusements such as concerts, bars and restaurants, and hotels and other short-term rentals.

“Truly the bar and restaurant sales have come back very strongly, and we set a (monthly) record in May of ’21 in bar and restaurant sales,” he said.

DeGrood shared a financial update with the Regional Transportation Authority Technical Management Committee in early September, and the RTA Board in late September.

“We had budgeted a 15% decline” in revenues due to the pandemic, he said. “We saw almost 12% year-over-year growth, which is unprecedented in our history.”

The RTA relies on revenue forecasting from the Eller College of Management’s Business Research Center, which uses a number of economic indicators to produce estimates for financial planning. This fiscal year, which began in July, is also trending above projections, DeGrood said.

The surprising revenue collections were boosted by online sales, which have performed well during the pandemic, and by over $21 million in marijuana sales within Pima County, which generated $103,000 in revenue for the RTA in June.   Pima County residents spent more on recreational marijuana than they did on amusements such as movies and concerts, DeGrood said.

For the fiscal year that ended in June, the RTA is approximately $22 million ahead of projections. The money will be programmed for RTA use and could help make up for revenue declines seen as a result of the 2008 Great Recession.

RTA works with Eller economists to create a new revenue projection every three years, with the next three-year projection update scheduled to be delivered this fall.