Originally Published: May 8, 2008 9:25 p.m.
PRESCOTT VALLEY - As it marks its 30th anniversary, the Town of Prescott Valley is facing the worst national economy since it incorporated, Town Manager Larry Tarkowski said.
However, Tarkowski also sees a ray of hope, writing in his introduction for the 2008-09 budget, "... we are looking at one of the best years in the history of our community."
Town government officials are grappling with a draft budget that could be about $19.5 million lower than the $111.5 million budget they adopted for 2007-08.
The Management Services Department prepared a $92 million budget that predicts the national economic slump will continue to bring a drop in sales taxes and other revenues.
This past October, Tarkowski imposed a freeze on hiring and new capital projects, and instructed department heads to reduce their operating budgets by 10 percent.
Tarkowki and Management Services Director Bill Kauppi started Wednesday's 2.5-hour work/study meeting with a general overview.
"We began the year with cautious optimism expecting modest growth in revenue and with great excitement about new dollars expected from a dramatic increase in commercial footage coming online," Tarkowski stated. "What we encountered was a virtual collapse in the single-family residential home construction in our new master-planned communities."
Tarkowski said the town expects 12 more months of "lethargic housing," a decline in state-shared revenues and "less than robust" sales tax collections even though The Home Depot, Sam's Club, the Sportsmen's Warehouse and Wal-Mart will open during the fiscal year.
State-shared revenues come primarily from sales and income taxes.
However, Tarkowski expressed optimism about "unprecedented commercial growth" and the construction of a library.
He added staff has recommended hiring more people only for the Magistrate Court to handle photo-radar citations and for the library, which is moving from the third floor of the Civic Center. The budget document states that the number of employees will increase from 8.6 to 9.6 in the court and from 16.5 to 27.25 in the library.
His written statement has a chart showing the budget for 2008-09 dropping almost 17.5 percent. Staff proposed the deepest cut - about 48.8 percent - for capital outlay at about $28.3 million.
"We beat back any attempts by the state Legislature to dig into our state-shared revenues," Tarkowski said.
The new budget year faces a gap of $27.1 million in projected spending and revenues, Kauppi said. His staff prepared a nine-page report showing a 16 percent drop in sales tax revenues and 38 percent drop in one-time construction sales tax revenues over the previous fiscal year.
Councilman Mike Flannery said after the session that he is pleased with the process.
"I think everyone involved in this - department heads and staff town wide - should be commended in this because it is a tremendous effort in maintaining budget goals," Flannery said.
Mayor Harvey Skoog did not attend the meeting Wednesday because he was on vacation.
The Town Council plans to approve the tentative budget on May 22 and adopt the final budget June 26 after conducting a public hearing that day.
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