Originally Published: January 20, 2010 10:20 p.m.
PRESCOTT - With half of the fiscal year now behind it, the City of Prescott has conducted only about 40 percent of the business it intended to do by this time.
The reason: Lack of revenue.
During its mid-year budget report on Tuesday, the Prescott City Council learned that declining revenues throughout late 2009 continued to affect operations in a variety of city departments.
"As revenues are not coming in, we are making cuts," Budget and Finance Director Mark Woodfill told the council. "That's why we're at 40 percent of our operating budget."
The fiscal year, which began on July 1, 2009, wrapped up its first half on Dec. 31. Normally, the city would have conducted about one-half of its business by that time.
Enterprise categories - the departments that the city requires to be self-sustaining - contributed significantly to the city's overall shortfall in revenue.
For instance, Woodfill's numbers showed that the downtown parking garage would receive a $10,000 transfer from the city's general fund to help cover operational costs this fiscal year.
That led to questions from council members about why the garage is not paying for itself.
Since the opening of the structure in 2005, parking in the garage has been largely free to users, except for a charge during special events and lease/rental agreements.
When council members asked why the city had not begun regularly charging for use of the garage, City Manager Steve Norwood noted that the most effective way to get drivers to park in the garage rather would involve charging for on-street parking.
But, he said, the consensus of downtown organizations has been "Right now, in this economic climate, you don't start charging for on-street parking."
Even so, several council members voiced support for beefed-up parking revenue.
"Without a doubt in my mind, parking meters need to come back - regardless of what the economy's like," Councilman Steve Blair.
Others, including Councilman John Hanna and Councilwoman Mary Ann Suttles, maintained that the garage should be generating enough revenue to cover its expenses.
In other departments:
Woodfill's numbers also showed that the city-owned Antelope Hills Golf Course took in just 44 percent of the money that the city expected, while its operating expenses stand at 54 percent.
That has resulted in a situation in which the golf course has continued to borrow from other city funds. Woodfill estimates that the outstanding debt that the course has with the city currently stands at about $2.5 million.
Helping the situation somewhat next year will be the final repayment of a Municipal Property Corporation bond debt that the golf course has been paying off since 1990, when the city built and financed the south course.
"Next year, the golf course's debt service will drop by $486,000 (per year)," Woodfill said - a situation that should help it to make inroads into the debt it has accrued with the city.
Woodfill attributed much of the golf course shortfall to a drop in rounds of play.
Mid-year numbers showed that the Prescott Airport has collected about 47 percent of the revenues expected overall, but revenues in the "fuel flowage fees" category had fallen short of that - at just 39 percent of the year's anticipated revenues.
Mayor Marlin Kuykendall attributed that to fuel rates at the airport that he said were not competitive with other area providers.
"When our tenant is not competitive, obviously that cuts way down (on the flowage fees that the city receives)," Kuykendall said, referring to the fixed base operator (FBO) that the city has contracted with to provide a number of services at the airport.
Hanna also voiced concerns about the cost of fuel at the airport, maintaining that some local pilots regularly fly to other airports to fill up, because they can get fuel elsewhere for about 60 cents less per gallon.
Airport Manager Ben Vardiman noted that part of the higher cost for fuel in Prescott stems from the fee that the FBO pays to the city as part of the contract.
He added that the shortfall in revenue also stems in part from a downturn in business because of the economy.
Jerry Lawyer, manager of the FBO, Legend Aviation, agreed Wednesday afternoon that the economy has affected revenues.
"A lot of people park their airplanes or have sold their airplanes," Lawyer said.
In addition, he maintained that Legend's fuel prices are "right on the average," compared with other providers in the state. "Every airport has different requirements," Lawyer added. "It's like comparing apples to oranges."
The council made it through only about half of its departments during this week's workshop. It will continue the mid-year budget review at 1:30 p.m. Tuesday.
In addition, budgeting issues will be central to discussions at the council's goal-setting retreat on Feb. 12.
While the council originally planned to conduct its retreat in mid-January, officials say they changed the date to accommodate an Arizona State University consultant, who will provide free facilitation services for the meeting.