What is the cause?

The shortfall has city officials wondering as to why the city sales tax revenues came in under staff’s projections while sales tax revenues in cities across the state have been increasing steadily, Tadder said.

During the council meeting Thursday, Oct. 10, Flagstaff Mayor Coral Evans said she believes the sales tax shortfall was the result of less spending by residents following the city’s minimum wage increase.

She pointed to the fact that sales tax from retail purchases made up a significant part of the shortfall and that income from the bed, board and beverage tax was also down.

She said the minimum wage increase led prices to increase across the city, leading the cost of living to increase and residents to cut back on unnecessary spending.

“[Residents] are shifting and changing their spending habits; so where they might go out two or three times a week, maybe now they’re going out once. Where they might have decided to buy a new pair of winter boots, they might be holding on to their old winter boots and not doing that,” Evans said.

Flagstaff Vice Mayor Adam Shimoni was skeptical of that assertion.