The city of Sedona has released its figures for sales and bed tax collections for October, which continue to show both an overall decline in revenue and a sharper decline in overnight tourist stays.

Sedona collected $3,021,987 in sales tax during the month of October. This represents a drop of 2% from October 2022 and is 3% less than what the city budgeted for the month. For fiscal year 2023 as a whole, sales tax is down 5% so far compared to 2022 — and is lagging 13% behind the city’s budget.

Sedona also collected $844,792 in bed tax during October. This is down 6% from October 2022 and is 13% below what the city expected to collect during the month. Bed tax for the whole of the fiscal year so far is coming in at 9% below 2022’s numbers and 18% below the city’s budgetary expectations.

October’s sales tax collections actually represent a slight improvement over those for August and September, historically two of Sedona’s busier months, which were 10% and 12% below 2022’s revenues, respectively — and also 24% and 18% behind the city’s budget.

Hotel occupancy for the fiscal year is at 62%, down from typical levels of 70% prior to 2020. Occupancy for October was under 75%, compared to 80% the previous October. An average daily room rate of nearly $400 continues to cushion falling occupancy numbers to some extent.

The only category of sales tax collections to show any significant improvement year-to-year was construction, which was up 21% over October 2022. Leasing was down by 7% compared to the previous October, amusements by 13%, and communications and utilities by 40%.

So far this fiscal year, Sedona has collected just under $2 million less in sales and bed taxes than the city budgeted, a 13.8% shortfall. While the city projected that sales and bed tax revenues would increase by 9% over 2022 levels in 2023, they have instead fallen by 5.6%. If this trend continues, without strengthening, the city will finish the fiscal year almost $6 million short of its expected $46.8 million in sales and bed tax revenue.

Sedona’s 2023 budget was planned with the expectation that the city would receive $80 million in revenue during the fiscal year. A $6 million decrease in tourism tax revenue represents a 7.5% decline in overall city revenues — out of which the city must meet budgeted expenditures of $110 million.

In order to balance the 2023 budget, the city opted to bridge the gap between revenues and expenses by using surplus balances from the general fund. Excluding reserves, these balances totaled approximately $42.5 million when the budget was drawn up. Covering the revenue shortfall as planned will reduce the general fund surplus to $12.5 million by the end of the fiscal year. If tax collections fall by $6 million, that will further reduce the surplus to $6.5 million by the end of next June. If collections fall still further, or the city incurs an unexpected expense, the remaining surplus will disappear entirely.

The city’s budgeted expenditures for 2023 did not include the additional $24 million obligation incurred by the city on Nov. 22 with the city council’s decision to purchase the vacant Sedona Cultural Park. $10 million of the purchase price was to be paid in cash, with the remainder funded through an issue of bonds secured by Sedona’s tax revenues.