Palm Springs sales tax revenue is up as Measure J spending accelerates

Palm Springs’ voter-approved Measure J fund is beginning to spend down a large balance built up from previously approved projects, even as sales tax revenue continues to run ahead of last year, the city’s Measure J Oversight Commission learned at its meeting last week.

Palm Springs Director of Finance and Treasurer Kristopher Mooney presented the May budget update during the commission’s regular meeting. He said the fund has collected $16.9 million in sales tax revenue year to date, with two more months of collections still to be recorded before the fiscal year ends June 30.

Sales tax revenue is running 4% to 5% ahead of last year, even as continued spending on capital projects is projected to leave the fund with a deficit of about $1 million by the close of the fiscal year.

Mooney said the city’s three largest sources of sales tax revenue are auto sales, the food and beverage industry and gas stations. Measure J, the city’s voter-approved sales tax measure, receives 1 percentage point of the roughly 9% to 9.25% sales tax charged on most purchases in the city.

Despite the revenue growth, Mooney told commissioners the fund is on track to draw down its balance as outstanding invoices for previously approved projects continue to be processed. He said the projected $1 million deficit is not a sign of financial distress, but reflects the city spending Measure J dollars on previously budgeted capital projects, including projects whose funds have been carried over from prior years.

“We’re projecting a deficit of a million dollars as we continue to spend,” Mooney said. He said the fund will begin drawing into the fiscal year 2027 budget as additional invoices arrive in the coming months.

Among the fund’s largest expenditures to date was $4.1 million for vehicle purchases and deferred maintenance, including the purchase of a fire pumper apparatus for $874,000, Mooney said.

The city’s annual street paving contract accounted for about $8.89 million in spending, Mooney said. He said the engineering department recently received approval for a new round of street resurfacing, expected to total just over $9 million using a combination of funding sources, with the work to be carried out over the next fiscal year.

The fund also covered continued construction on a dog park project and roughly $1.4 million in spending on new recreational courts, Mooney said. Convention center design work cost the fund $392,000, an expense Mooney said will eventually be reimbursed through bond proceeds once the city issues debt for that project.

Mooney also reported $360,000 in transfers out of the fund, including $250,000 tied to a previously issued loan to the Public Arts Commission and $110,000 toward restroom improvements at a city park.

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