The Sedona City Council’s tentative budget hearing was scheduled to take about 30 minutes to complete on Tuesday, May 16. More than two and a half hours later it was unanimously approved.
The total budget, after changes made throughout the budget workshops last month, is $47,752,118. This represents a $9.4 million — or 24 percent — increase from fiscal year 2016-17.
The increase is largely due to an increase in capital improvement projects for transportation, drainage and wastewater systems, a city report states. Now that the tentative budget has been approved, changes may only be made within the total amount or to reduce it — no increase to the total budget can be made.
The final budget is scheduled for a public hearing and council approval on Tuesday, June 13.
“We always build some cushion in there because we have some contingencies and those type of things,” Finance Director Cherie Wright said. “Ideally, that’s what we’re trying to get to. What do we want to set as that ceiling [budget cap]? As you are well aware, each year we never reach that ceiling, we are always well underneath it. We try to set that max for whatever the potential might be for the year.”
Nearly half of the budget — $21 million — is made up of the general fund. This includes all of the expenses for the day-to-day operations of most of the various city departments including police, parks and recreation, finance, public works, etc. Salaries and benefits are included there, but also any contractual services like consultant studies or other contracts; commodities purchases such as office supplies and equipment; and operating capital items, like new or replacement vehicles.
The city’s expenditures include [upcoming fiscal year compared to current one]:
- Capital improvement projects: $14,131,000 — [compared to $8,972,000 last year]
- Operations: $13,809,000 [$11,492,000]
- Personnel: $12,648,000 [$11,128,000]
- Debt service: $5,864,000 [$5,859,000]
- Contingency: $1,300,000 [ $910,000]
In terms of revenue, 35 percent of the city’s budget comes from city sales tax followed by the use of fund balances [reserves] at 21 percent. Charges for services represents 17 percent of the budget while bed taxes and state shared revenues each make up 8 percent.
New to next year’s budget is an information technology fund in the amount of $1,552,606.
This was set up to create a replacement reserve for computers and other IT equipment. It also allocates out the costs for centralized IT support to each of the operating departments that use IT equipment and its services. IT will be paid for now by each of the other departments.
As he did during the budget hearings, Councilman John Currivan argued that the city does not have a balanced budget and nor should it tout itself as having one.
“We didn’t pass a balanced budget in [fiscal year] ’17 because we budgeted to spend more than we were budgeting to take in,” he said. “And we’re not going to be passing a balanced budget tonight. So let’s not claim it. When we list city council accomplishments, I hope that we will not list that we approved a balanced budget.”
To that, City Manager Justin Clifton quickly responded, “I don’t want to belabor the point but our definition is a legal definition and it is a balanced budget. Unless council gives us direction to change that definition to be restricted to a fiscal year without respect to accumulated savings, we, by the standards imposed on us by the state, are passing a balanced budget.”
During public comment five individuals spoke in regard to this year’s service contract between the city and the Sedona Public Library. Last month, a citizen budget committee recommended $493,932 for the library, which had requested $656,160. Council eventually recommended $403,780.
Those representing the library argued that more is needed to keep up with demand and to increase hours of operation back to where they were prior to them being cut during the Great Recession. They asked that if nothing else, council increase that figure to committee’s recommendation.
In regard to the library, the next day Clifton said the city will consider the request to increase the funding at a future meeting. Even though the budget has been approved, he said there are sufficient funds to supplement the previouslyapproved funding level for the library.
“The only thing I would add is that these are hard decisions,” he said. “We are always considering competing needs and wants relating to running an efficient government, the service demands of our citizens and the partnerships we have with many valuable nonprofits. Almost all our requests for funding are valuable. The hard part is allocating limited resources for today and tomorrow in the best way possible.”
As for the overall budget, Clifton said he feels it does a good job of providing for the services and projects the citizens expect and need.
“Many of our funding priorities come directly from input from our citizens,” he said. “It is difficult to understand the budget just by looking at the revenues compared to expenses or looking at this budget compared to the last. There are a lot of things going on that may not be readily apparent.”
First, he said it’s important to recognize that the state of Arizona requires that the city establish a maximum spending limit. Once that limit is established, it cannot go over it. That means that the budget reflects every dollar the city could spend. What it actually spends is always something less.
Second, this year the expenses are projected higher than the revenue and the spending limit is higher than the previous year because they contemplate some larger capital projects, including transportation projects. These projects are paid for with a combination of money they anticipate coming in next year and money that the city saved in previous years.
“The city is never allowed to deficit spend like the federal government,” he said. “Those savings are not projected to last forever and we continue to explore ways to accomplish ambitious capital projects into the future. For now, this budget strikes a nice balance between providing services and building important projects our citizens expect and continuing a conservative approach that preserves a strong bond rating and flexibility to respond to changing financial conditions.”