PV officials anticipated smaller budget, prepared ahead
Prescott Valley town government officials are grappling with a budget for the upcoming fiscal year that is expected to be about $19.5 million lower.
They prepared a smaller budget for 2008-2009 because they predict the national economic slump will continue to bring a drop in sales taxes and other revenues. The new fiscal year begins July 1.
The Town Council and department heads reviewed the proposed $92 million budget during back-to-back sessions Wednesday and Thursday night. They allotted three and a half hours for Wednesday's session, and completed it an hour early.
Anticipating a decline in revenues, Town Manager Larry Tarkowski imposed a freeze on hiring and new capital projects in October, and instructed department heads to reduce their operating budgets by 10 percent in advance of the upcoming fiscal year.
Tarkowki and Management Services Director Bill Kauppi started Wednesday's work/study meeting with a general overview.
"We are going to be in pretty good shape," Tarkowski said.
He prepared a three-page statement with the draft budget that read 2007 was "unlike any year" in Prescott Valley's 30-year history as a municipality.
"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. Since incorporation in 1978, we have not experienced the depths of a national slowdown to the extent that we are presently facing ..."
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 and the Sportsmen's Warehouse and Wal-Mart will open.
State-shared revenues come primarily from sales and income taxes.
However, Tarkowski said the town looks forward to "one of the best years in the history of our community," adding he anticipates "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 2008-2009 dropping almost 17.5 percent from its current $111.5 million. Staff proposed the deepest cut, at about 48.8 percent, for capital outlay, at about $28.3 million for 2008-2009.
"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 that stated the town as of March experienced a 16 percent drop in sales tax revenues and 38 percent drop in one-time construction sales tax revenues over the previous fiscal year.
Using an overhead projection, Kauppi said sales tax revenues are due to drop from about $16.8 million in 2007-2008 to $13.7 million in 2008-2009.
"We are going to have to closely monitor our sales taxes," Kauppi said.
He said he expects overall revenues to drop from $107.4 million in the current fiscal year to about $64.9 million in 2008-2009.
The draft budget for 2008-2009 shows capital outlay at 31 percent, operating expenses at 26 percent and personnel (pay and benefits) at 18 percent of the budget.
The General Fund accounts for $34.6 million of the overall budget, Kauppi said. The library will account for $17.2 million of the General Fund budget in 2008-2009.
Responding to a question from the council. Kauppi responded, "Is the town in any fiscal trouble? No."
Presentations followed from Town Attorney Ivan Legler, Human Resources Director Danielle Bowman, Community Development Director Richard Parker Richard Parker, Parks and Recreation Director Brian Witty, Police Chief James Maxson and Town Clerk Diane Russell.
Legler said his budget is largely unchanged, but noted his office plans to pay more for outside legal services in 2008-2009. He proposed increasing it from $100,000 to $150,000 in 2008-2009.
Town employees can expect lower raises in 2008-2009. During her presentation, Bowman said employees would be eligible for 1 percent for cost of living and as much as 3 percent for merit.
The town is budgeted for about 242 permanent full- and part-time jobs in 2008-2009, Kauppi said afterward.
The Community Development Department is feeling the effect of fewer building permits - and fees collected, Parker said. The budget document states revenues are projected to drop from about $1.1 million in 2007-2008 to $726,800.
The budget for the Police Department is expected to drop from about $12 million to about $8.7 million in 2008-2009, and the decline may reflect the recent completion of the remodeling of the station.
Police Chief Maxson, who started on the job April 7, talked briefly about the services that his department provides. His budget projects calls for service will increase from 88,792 to 93,232 in 2008-2009.
Council members heard presentations Thursday from Library Director Stuart Mattson, Magistrate Judge Keith Carson, Public Works Director Norm Davis, Capital Projects Coordinator Kim Moon, Water Resources Manager John Munderloh, Utilities Director Neil Wadsworth and Kauppi.
The council is due to approve the tentative budget May 22 and adopt the final budget June 26 after conducting a public hearing that day.
Mayor Harvey Skoog did not attend the meeting because he was on vacation.
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