Sedona: Another day older and deeper in debt

By Peter J. Fagan

SEDONA, AZ (Nov 2, 2009) - In 1955 Tennessee Ernie Ford recorded a Merle Travis coal mine song “Sixteen Tons” that became his greatest hit. You may recall the lyrics: “You load sixteen tons and what do you get? Another day older and deeper in debt, St. Peter don’t you call me, ‘cause I can’t go: I owe my soul to the company store.”

Maybe we should adopt part of theses lyrics for Sedona’s official song: “Another day older and deeper in debt… I owe my soul to the company store.”

Two years ago I wrote a column for the Sedona Times entitled “What if there were no tourists?” In that column I projected a financial crisis in Sedona’s sales taxed-based revenue, if tourism fell off and excise tax revenue declined. Sedona is currently the highest per capita indebted city in Arizona. We owe our soul to the company store (bondholders). 

Past administrations have mortgaged our future to provide services that in retrospect seem beyond our means. With city revenue falling and the state of Arizona running huge budget deficits, it looks like our current council and administration will have to take drastic steps to bring the city’s expenses in line with income. Over the next decade, the debt service alone − not counting the wastewater fund, which will be out of money in a few years − amounts to $61,927,841. That averages more than $6,000,000 per year, which translates to $54,000 annually for every man, woman and child in Sedona. And we haven’t spent a dime to run the city.

Our major sources of income are in the form of excise taxes (sales, bed and construction) and shared state revenue. Through June the only increase in revenue over the previous year was from construction taxes, mainly State Route 179 and Sedona schools. Overall excise tax revenue decreased by 8.5 percent during the second quarter of the year. Third quarter numbers have yet to be released but indications are that the decline in revenues is even more severe.  Add to this the fact that the state is going to cut revenue sharing in the neighborhood of 15 percent, and you can surely see the financial storm rising.

The options are fairly limited. One thing is for sure: We have to balance the budget. We cannot borrow our way out of this one. Large cuts in city services are going to have to be part of the answer. Alternative sources of revenue can also be part of the mix. Two additional sources of revenue have been bantered about. One is an extension of the sales tax to food; the other is an imposition of a city property tax. When sent up as trial balloons, as they should, both of these ideas met with stiff resistance from the public.

With council elections coming in March 2010, we need the current city council to make some dramatic decisions and not pass the buck to the next council.  The small tinkering they have done so far with expenses is not enough. Even if the tourists return they may not spend their money as freely as they have in the past. The time for bold action is now.

Is this city council capable of that?

Editor’s Note: Peter Fagan is a columnist for the Sedona Times. The opinions expressed in this article are his and do not reflect the views of the Sedona Times or Sedona.biz.