What if there were no tourists in Sedona?

By Peter J. Fagan, Financial Advisor | Sedona Verde Valley Times columnist

Sedona, AZ - Sedona has, and is continuing to build, a tourist-based economy. To help finance that economy our city government for years has been spending money it does not have.

The 2000 census placed the population of Sedona at 10,192. So today, there are roughly 11,000 residents in Sedona. The city’s debt currently stands at $94 million. The city has proposed to add an additional $11 million -$16 million in new debt to that figure. That would bring each of our shares of the debt to $10,000, quite a bit per capita for a very small city.

If the tourists disappear how are we going to pay off the debt?

What happens if some of the various revenue bases dry up and the city cannot meet its debt?

Much of this debt is general obligation bonds financed by a variety of tax sources, construction fees, impact fees, bed taxes, etc. Debt is also tied to the sewer system, which now appears will never cover the entire city and the revenue needed to meet the debt obligation will be generated from a smaller base.

Another source of our bond indebtedness is the sale of future sales tax revenue. Tricky stuff to repay if the tourist traffic slows and future-sales tax revenue do not live up to projections.

We already have one of the highest local sales taxes in the country. Already the impact of the “Big Dig,” Highway 179, is having a negative effect on current-sales tax revenue. And this could be just the start of a long two-year drain.

Isn’t time that the city started to live within its budget? We are spending a lot of money in a variety of areas to support a tourist-based economy.

Are we getting our money’s worth? Are we, the city, making a profit on our investment? Are we overspending today with hope of a future return? Has this emphasis dramatically affected the lifestyles of the citizens of Sedona? Will it affect our future lifestyles?

You bet it will!

We provide a lot of free services to the tourist population - parking, transportation, police, fire, etc. Maybe it is time to rethink some of these free services. For example, most western tourist towns charge for parking. The computerized operations are unobtrusive and can generate significant income.

Sedona is famous for its studies. We have studied Route 179, Red Rock Crossing, Uptown, 89A lighting, etc. I do not recall a recent study that focused on sources of city revenue. In recent years the sources of revenue have varied from year to year. Now is time to form a group to really delve into our sources of revenue and obtain the maximum from the folks upon whom we are spending a lot of our money.

Let’s not wait until we are in another crisis. If we have to borrow $11 million-$16 million dollars we are definitely in a crisis.