Prescott’s sales tax revenues up by 5.6 percent
Increase tax for PSPRS will add to overall growth
Even before the City of Prescott begins to see the results of a new 0.75-percent sales tax, revenues from its existing 2-percent sales tax continue to rise.
The city’s budget and finance director, Mark Woodfill, gave a mid-fiscal-year budget report to the Prescott City Council on Tuesday, Feb. 13, and the news was mostly positive.
For the first six months of the fiscal year that started July 1, 2017, the city’s sales tax revenues grew by 5.61-percent. That growth is significantly higher than the 2-percent growth rate that city projected during its budgeting process.
The sales tax numbers do not yet reflect the new 0.75-percent pension-related sales tax, which went into effect on Jan. 1, Woodfill said.
He explained that local businesses are collecting the new tax and will report their first-month totals to the Arizona Department of Revenue (DOR) by Feb. 20.
“We’ll get the reports from DOR in the middle of March, and that’s when we’ll know what our first month was,” Woodfill said, adding that the city would then transfer that revenue to its Public Safety Personnel Retirement System (PSPRS) trust fund.
The new tax, which voters approved in August 2017, is dedicated to paying down the city’s debt with the police and fire pension system.
In recent years, the unfunded pension liability created a strain on the city’s general fund. Upwards of $7 million was required to go toward the unfunded liability in the current fiscal year, and the amount was expected to grow each year.
Woodfill’s report shows that the unfunded PSPRS liability makes up 20.1 percent of this year’s general-fund operating budget. That is separate from the 24.6 percent of the budget that goes toward the fire department’s operations and the 33.4 percent that goes toward the police department.
Overall, public safety (police, fire, and PSPRS) makes up 78.1 percent of the city’s general-fund operating budget.
In 2017, the City Council opted to devote $11 million of its reserve funds to help pay down Prescott’s $86.4 million debt with the PSPRS. I n addition, the city sold some of its unused properties, including the Granite Mountain Hotshots’ previous home station (Station 7), to help pay down the debt.
Woodfill’s report shows that $12,215,000 went toward extra payments to PSPRS in the first half of the fiscal year.
Along with a report on the past six months, Woodfill’s report touched on the budget for the coming fiscal year. Planning for the 2019 budget began in January, when city departments took part in a kick-off meeting.
Budget planning will continue through February and March, and City Manager Michael Lamar and Woodfill will review the proposed departmental budgets in April.
The City Council will conduct its budget workshop in May, and a vote on the preliminary and final budget will take place in June.
One public-safety issue that the council will face in the coming fiscal year pertains to the future of the federal SAFER (Staffing for Adequate Fire & Emergency Response) grant that the city received in 2017.
That two-year grant, which allowed the city to restore three firefighter positions that had been empty, is set to expire in February 2019.
Woodfill said a decision would be needed on whether the city should reduce serv ice levels at that time, or come up with the $750,000 needed to continue the positions.
Mayor Pro Tem Billie Orr suggested that the fire department should look in the meantime into re-applying for a renewal of the grant.
Fire Chief Dennis Light said his department is prepared to meet the grant-application deadline. But, he said, many other agencies will also b e vying for the grant money.
“Whether they’ll look favorably on re-authorizing is still to be determined,” Light said.