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Sedona Mayor Rob Adams |
City of Sedona's Finances: The Good, the Bad, and the Ugly
by Rob Adams, Sedona Mayor
SEDONA, AZ (July 7, 2009) - After months of
research, negotiating, wrangling and sleepless
nights, the Sedona City Council approved the City
budget for fiscal year 2009-2010 on Tuesday, June
23. In the interim, there has been a considerable
amount of misinformation, debate and second-guessing
by certain members of the public about the state of
the City finances. Comments in the press have
included “the City has run amok,” “does our City
even know how to budget?” and “the City government
must face the economic realities of today.” In order
to address concerns of the public, I will look at
some of the history behind the budgetary
decision-making by staff and Council and give you an
overview of where our City finances stand.
THE GOOD
The good news is that the City operating fund
(otherwise known as General Fund) is in better
financial condition, comparatively, than most other
municipalities in Arizona. Because the City has been
conservative in its revenue forecasts over the
years, our revenues have generally exceeded our
expenses. Thus, we have accumulated over a ten
million dollar reserve account. Our reserves give us
a “rainy day” or savings fund from which we can
withdraw if our revenues do not meet our
projections. Even though the current economic
meltdown has been the worst since the great
depression, we are not expecting to dip into more
than 5% of our reserves for fiscal year 2008-2009.
In order to meet the challenges of the economic turndown, staff and Council have been proactive in making budget cuts to all funds in the City. Beginning in the early fall of 2008, staff and Council began to reduce City expenditures. Hiring freezes, educational and travel allowance reductions, contingency freezes and elimination of surveys and studies were all initiated to reduce General Fund expenditures. In addition, over $1,000,000 worth of Capital projects were deferred. In the ensuing months, strategies were developed for additional expenditure savings. The new budget includes a reduction in the General fund expenses of over $1,354,000 or 10.23%. The Wastewater fund expenditures have been reduced by $3,389,063 or 14.59%. The Capital fund expenditures have been reduced $5,587,236 or 41%.
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Numerous other expenses have been reduced or eliminated. In August of 2008, at my request, a committee was formed to re-evaluate the RoadRunner transit system. The recommendations of that committee have resulted in a revamping of the RoadRunner transit system with a 32% reduction in the operating costs. In addition, the Northern Arizona Intergovernmental Public Transportation Authority (NAIPTA) requested and was awarded Federal stimulus funding that will reduce the City’s contribution to the development of a regional transit facility from $450,000 to less than $75,000. The proposed Redevelopment Plan for SR 89A, with an associated cost of $450,000, has been put on hold with the money being put into a contingency fund. If there is an upturn in the economy, the project will proceed. If the economy does not improve, the project will remain on hold or will be eliminated. The Creekwalk project, with an associated cost of over $1,000,000, has also been delayed indefinitely.
The bottom line is, staff and Council have been
extremely responsive to the economic downturn.
Budgetary adjustments well in excess of $10,000,000
have been made to ensure that the City can meet the
challenges of our economy.
THE BAD
The bad news is that the City Council has adopted a
budget for fiscal year 2009-2010 that authorizes
expenditures that are approximately $370,000 more
than projected revenues in the General Fund. This
means that the City is authorized to dip into the
reserve account up to $370,000 to pay for operating
expenses in the next fiscal year.
The obvious question is, why didn’t we cut expenditures even more so that we would be able to balance the budget? As I previously pointed out, the expenditures in the General Fund have been cut by $1,354,000 or 10.3%. This was accomplished by freezing hiring in the City, freezing City salaries, reducing employee benefits, etc. Our employees are doing more for less. In addition, the City reduced funding to many non-profits that provide services for our citizens such as the Adult Community Center, the Library, Sedona Recycles, the Humane Society and the Boys and Girls Club. As a result, these organizations are attempting to continue their services with less funding. The City also provides funding for major arts organizations that provide community benefits such as the Film Festival, the Sedona Arts Center, Chamber Music Sedona and the Sedona Arts Festival. These organizations have had to tighten their belts but are still able to operate and provide critical services and benefits to our community.
The strategy of the City was to reduce expenditures and funding in the budget with minimal impact to jobs or services. If the City had made the decision to balance the budget by cutting an additional $370,000, numerous services and jobs would have been lost. Since the reserve fund has a healthy balance, it was determined that it was preferable to dip into the reserves for this year vs. eliminate jobs and services.
Even though no one was happy with the reductions
in their funding, a high level of service will
continue to be provided by our City employees, the
various non-profits and the arts organizations. Most
other cities in Arizona have been forced to
eliminate many jobs and a wide range of essential
services.
THE UGLY
The ugly part of the Sedona fiscal picture comes in
two parts. The first is the potential impact from
the State’s attempt to balance its own budget. The
second is the ongoing challenges of our Wastewater
Fund.
As of July 1, we still don’t know what the financial impacts will be to our City as the State attempts to balance its own budget. Revenues that are normally received from the Vehicle License tax (VLT), the Highway User Revenue Fund (HURF) and Development Impact Fees are in jeopardy of being reduced or eliminated. Depending on the outcome, Sedona’s ability to fund Capital improvement projects may be seriously diminished. At the present time, Sedona has close to 100 million dollars worth of Capital projects that are being considered. The yearly revenues to our Capital Fund are only about 2 million. Any further reductions to our revenues will not only impact our ability to pave streets, build sidewalks and other capital improvements, but it will challenge our ability to simply provide necessary maintenance.
The Wastewater Fund is arguably Sedona’s biggest financial challenge. We are presently spending tens of millions of dollars from the Wastewater Reserve Fund to upgrade, maintain and expand our wastewater infrastructure. Much of the infrastructure was installed over 20 years ago and is in need of upgraded technology and repair of aging and obsolete equipment. In addition, the City is researching alternative methods of disposing of its wastewater. As a result of these major expenditures, the reserve fund is projected to be depleted within the next four years. Difficult decisions are going to have to be made to increase revenues to this fund.
In conclusion, the notion that the City staff or Council has not been proactive or prudent in dealing with the City budget is preposterous. A large reserve fund has been accumulated over the prosperous years and a small portion will be used during the lean years. Budget cuts have been ongoing and will continue to be made to meet the reduction in revenues. Careful consideration has been given to a fair distribution in the reduction of funding to non- profits. The City of Sedona is committed to providing the highest level of service to its citizens within a fiscally responsible budget.
The views that I am expressing are my personal opinions and not necessarily the opinion or position of the City of Sedona or the City Council.
Readers' comments
#1 Apparently Mayor Rob Adams is looking to add
to the financial burdens of Sedonans.
THE GOOD news is the voters will have the
opportunity to elect a fiscally conservative
Mayor and City Council during the upcoming March
2010 elections.
THE BAD news is the 2009/2010 Budget is woefully
inadequate in that it fails to ensure future
infrastructure and wastewater system needs can
be met. In his glowing report about the City
operating fund, aka the General Fund, the Mayor
does not mention that this fund is only 27% of
the total city budget of $44,522,917. Capital
Projects, Wastewater and Street Funds are all
underfunded, with the Wastewater Enterprise Fund
projected to go down to zero by 2013 according
to City Hall's "Five Year Outlook of Wastewater
Fund Revenues/Expenditures."
THE UGLY news is the wasteful spending goes on,
e.g., continued unnecessary sewering of the
City, operating the near-empty RoadRunner bus
system, $498,114 in welfare for the Chamber of
Commerce, etc., while the Wastewater and Capital
Projects Funds get short-changed. So where are
the funding shortages to come from? Monthly
sewer fees will go up after the results are in
from the $42,640 wastewater rates study the City
Council approved in May. When asked recently by
Carl Jackson (Ref. "Lunch with Sedona's Mayor"
article) Rob Adams didn't answer the question of
whether a City property tax is on the horizon.
General Obligation Bond annual assessments
(GO-Bonds) to fund infrastructure and wastewater
system requirements may be wanted from the
taxpayers in the near future, too. This matter
shows up in City Manager Council Agenda
Communications from time to time. Today Yahoo!
Real Estate lists 220 foreclosures in the Sedona
area. Unnecessarily burdening Sedonans
financially, many of whom are on fixed incomes
or already face hardship and don't know where
their next meal is coming from, is a travesty.
Jean Jenks
#2 I agree with Jean.
As to the notion that services will be
maintained, I would have to ask what services?
Except for the police department enforcing
traffic laws I am unaware of any services the
city provides. The streets and sidewalks are
poorly maintained, and the weeds are not
controlled except along the center strips.
Citizens who are hooked up to the sewer pay a
fee, ableit insufficient to support the
wastewater facility which is euphemistically
named the 'Enterprise Fund'. So I would ask
what services are provided to the citizens of
Sedona.
Finally, if the waste water plant was bordering
on obsolete and requiring so many 'millions' of
dollars to upgrade then
why would the council first vote to hook-up more
residents in the Chapel area thereby stressing
the plant further before the upgrade.
It is simply just extremely poor planning and lack of proper prioritization.
This article is just another example of pablum for the masses meant to sooth and placate. It is rather self-servicing, disengenuous, and if believed to be true by the writer pathologically optimistic.
Terry Nash
#3 I would like to suggest to both Ms. Jenks and Mr. Nash that they try some community service and do something positive for their city. They might find it more rewarding than to continually criticize and chastise city staff and elected officials from the comfort of their living rooms. I would also welcome a face to face meeting to address their concerns. I believe that would be more constructive than attacks via the media.
I believe I addressed their concerns in my
essay. There was no sugar coating.
Rob Adams
#4 I have offered to debate the budget with Mr.
Adams. He has declined my invitation. While he
has declined he still insists that he has
greater expertise regarding the budget and that
it would not benefit him personally to debate
me.
I offer through this media that he debate me. I
welcome his acceptance of my offer. What I am
envisioning is that the debate take place in a
public format where we are each allowed to
invite 50 of our most stalwart supporters which
must be named beforehand, and that the remainder
of the attendees are there because of the
interest and excitement this will generate in
Sedona, and that questions be generated
spontaneously through the audience but moderated
through Mr. Jackson for our response. The
initial response will alternate between us in a
one-minute period and a rebuttal of one-minute.
At the end of the debate a vote will be taken by
paper of those in attendance as to who won the
debate by a
simple majority decision. If I lose I will give
$2,000 to the local Boys and Girls Club. If Mr.
Adams loses he will
resign.
As to Mr. Adams asking that I become more involved in my community rather than continue to criticize his inapt mayorship from the comfort of my living room my retort would be simply that he has no clear understanding of my involvement in the community.
I think he believes because he attends fair openings, farmers markets, and other 'official' functions as the supposed leader of our community he believes he has an understanding of the needs of our community.
Nothing could be further from the truth. He cannot even garner the support of the majority of the council members much less understand the needs of Sedona's citizens. Let's schedule this debate and let those in attendance decide who knows better. And you can be assured that many of my supporters in attendance will be asking many questions regarding the budget but most specifically why you consisting talk around and avoid the issue of a looming property tax for the City of Sedona.
As you so often say to others, "Cowboy Up", and
accept my challenge. If you are such an expert
on the budget and
have such a strong citizen support within the
community you will easily win this debate and be
an even greater hero than
you already envision yourself to be within the
community. On the other hand, if I win the
debate it will show that you have
neither the knowledge on the budget or the
support you believe you have within the
community and you are thereby given an 'excuse'
to exit your mayorship and return to civilian
life where you won't have to read criticisms
from myself, Jean Jenks, or anyone else who
doesn't agree with you.
Terry Nash
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