State sales tax revenues are expected to increase slightly in the upcoming fiscal year, according to the League of Arizona Cities and Towns.

A report issued by the league in March notes that state sales tax revenue distributed to cities and towns is projected to increase by about four percent over the current fiscal year. Sales tax revenues are also divided among counties throughout the state.

State sales tax makes up a large portion of state shared revenues, but shared revenues also include vehicle license taxes, Highway User Revenue Funds (HURF) and state income tax. Although sales tax revenues are expected to go up, the league predicts that other revenues shared among cities, towns and counties will go down or remain the same.

Vehicle license tax revenues are expected to stay nearly the same. The legislature, however, has cut the total amount to be distributed to cities, towns and counties across Arizona. The funds retained by the state will be distributed to state agencies in order to keep the budget balanced.

HURF distributions are expected to drop by about four percent compared to the current fiscal year. The legislature also opted to dip into HURF funds normally distributed to cities and counties to help balance the state budget.

State income tax revenues are expected to drop the most, by a total of nine percent. The distributions for the coming fiscal year, however, are based on amounts collected two years ago. The league notes that since collections have already been made, the predicted drop should be accurate.

“This is the only one of the shared revenues which can be accurately forecast since it is based on collections from two years ago,” the report notes.

In fiscal year 2011-12, which begins in July for many cities and counties, the report estimates that the state will distribute a total of $184.2 million in vehicle license taxes, $302.3 million in highway user revenue funds, $380 million in state sales tax and $424 million in state income tax.

The distributions are made based on population. Cities and towns use the league report to help create balanced budgets for the upcoming fiscal year.

The league predicts the following distributions for fiscal year 2011-12:

* Holbrook, based on a population of 5,053: $262,303 in vehicle license tax; $583,083, HURF; $382,292, state sales tax; and $426,495, state income tax.

* Winslow, based on a population of 9,655: $501,195 in vehicle license tax; $1,114,123, HURF; $730,463, state sales tax; and $814,923, state income tax.

* Snowflake, based on a population of 5,590: $290,179 in vehicle license tax; $645,049, HURF; $422,919, state sales tax; and $471,820, state income tax.

* Taylor, based on a population of 4,112: $213,456 in vehicle license tax; $474,497, HURF: $311,099, state sales tax; and $347,070, state income tax.