Work on city's budget wraps up
PRESCOTT Arsenic treatment, retirement-benefit increases, and rising costs for law enforcement all combined this year to make the 2005-06 city budget especially challenging.
That is according to City Manager Steve Norwood, who has been meeting with the city's department heads for the past several months to come up with a balanced budget for the coming fiscal year. He expects the preliminary work to wrap up next week, and a draft document should be ready for review.
Then, the City Council will conduct a workshop at 11 a.m. on May 31 at the Prescott Police Department training room, 222 S. Marina St., to discuss the issues in the budget.
While Norwood allowed that officials regularly claim that each year is the most challenging, he said this year stands apart from others. And that means that expenditures for things such as capital improvement projects, new staff positions, and economic development projects will be at a minimum this year.
For the general fund, Norwood said, "there are two issues that are really driving" the budget crunch.
First off is the rising cost of retirement both for public safety employees and for the state retirement fund, in which the remainder of city employees participate.
"We have nearly $1 million of additional costs this year," Norwood said of the retirement contributions. Because the retirement accounts offer "defined benefits," he said the participants must contribute more to make up for the stock market slump in the early 2000s.
Another matter affecting the general fund is the rising cost of staying competitive in public safety salaries especially for police officers and firefighters.
Norwood said salaries are rising rapidly all over the state, as well as in the neighboring communities. If Prescott does not keep pace, it faces the danger of becoming a "training ground" for officers, he said, which would affect the city's ability to retain employees.
This year's budget will reflect a $600,000 to $700,000 increase for police and fire salaries, Norwood said.
That does not even take into account the raises for other city employees. "When we look at all of our employees, payroll will have a $2.5 million increase citywide," Norwood said.
Adding to the general-fund pressures are huge expenses in the city's utility accounts, including what could be a $23 million cost for a system to remove arsenic from the municipal water supply.
Several years ago, the U.S. Environmental Protection Agency toughened up its standards for the acceptable level of arsenic in water supplies. The new standards will go into effect in January 2006. Although the city complies with the existing standards, its water supply will not meet the new rules.
For months, the city has been studying the best options for arsenic treatment. Initial estimates had the total cost at more than $10 million, but Norwood said it now appears that the cost will be about $23 million. The city likely would bond to come up with the lump-sum amount, Norwood said, adding that the city would then have to pass the expense on to its water customers.
Although the tight budget makes for fewer financial decisions this year, Norwood expects the City Council to have a number of issues to debate. Decision items will include:
Additional money for the Adult Center. The city came up about $1 million short on the new building that it plans off Rosser Street, near the Cliff Rose subdivision. The council will have to decide whether to devote more money to the project to get it off the ground in the coming fiscal year.
The expansion and renovation of the Prescott Public Library. City officials expect the project to be considerably more expensive than originally estimated. The council will have to decide whether to come up with more money for the project, which the city has slated to go out for bid this summer.
Water conservation efforts. A committee has been working for months to come up with methods to reduce water use in Prescott. Among the recommendations is the addition of a new staff position, as well as new incentives for home builders. Norwood estimates the total cost at $200,000.
Camera enforcement at traffic signals in the city. At a cost of about $100,000, the cameras would help the city cite drivers who run red lights.
The addition of about 10 to 12 new staff positions, including five new police positions, a new traffic engineer, and several new parks and recreation employees.
The first phase of engineering and design for a water pipeline from the JWK Ranch to the tri-city area, at a cost of about $5 million.
Norwood estimates that the city's operating budget would increase from about $61.7 million for the current fiscal year to about $68.8 million for the coming year, while the capital construction amount would be down from about $103 million for this year to about $91.4 million for the next year.