By Sherry Twamley, Cottonwood Resident
(May 3, 2016)
Cottonwood’s water bill and taxpayers have taken a major financial hit under Mayor Diane Joens, who took office in June, 2003 (Councilmember 2003-2007, Mayor 2007-2016, vacating her seat to run for County Supervisor, District 3). . For more than 11 years, Cottonwood Mayor Diane Joens, has triumphantly grabbed photo-ops, awards and hugs as she trumpeted her successes for building bigger and flashier city facilities and annexations that yielded no economic benefit to the city, incurring skyrocketing debts the city cannot afford to pay, while almost 100 percent of the city’s income (more than $18 million) is spent on employee salaries, benefits and labor costs.
In July 2015, Joens told the city council that the city was on course “to make its mark in history” with a world class satellite wastewater plant next to the Verde River – she touted would be a significant attraction — loaded with solar panels, a learning center, and a big wall. But no one could stop her from approving millions of dollars on cost overruns. In a Verde News commentary, city councilmember, Randy Garrison said, “lack of transparency and accountability is nothing to brag about” — ”
Debt has escalated way out of proportion for this city of 11,555 population. Joens is the driving force behind the city’s more than $100,000,000 in principal and interest debt obligations, the city’s $19.6 unfunded pension liability, the millions in the Riverfront Water Reclamation Satellite Plant construction cost overruns, the 30 yr debts on the water bills from the six unlawful water company purchases without voter authorization required by A.R.S. 9-514, and the Cottonwood Recreation Center losses (the city is losing about 50% of the operating costs per year).
The per capita debt chart only includes PRINCIPAL DEBT. It does NOT INCLUDE the city’s millions of dollars in bond and lease purchase agreement interest over the life of the loans, does not include fees and insurance required to issue the bonds; or the interest for the $19.6 million in unfunded liabiity for all workers, and many other obligations of the municipality. It does not include the costs for the Riverfront Water Reclamation Satellite Plant or the future injection wells. None of the $19.6 million pension liability has been funded, so the city will be taking out another loan at possibly 7% interest.
For more than a decade, a combination of factors drove a steady increase in long-term costs to the city. But at the core, the local newspapers, the city leadership, and disengaged citizens ignored the possibility that the city was taking on millions of dollars in debt annually as if it was pocket change. The root of Cottonwood’s dire financial situation is similar to Stockton and Vallejo California, two cities who filed bankruptcy — bosses are paid big 6-figure salaries, employees’ salaries grow bigger every year with increasingly generous benefits, growing unfunded pension liabilities, vast government expansion using Wall Street bonds and federally-subsidized WIFA loans, the city’s $48 million in savings were depleted to balance the budget (reserves are gone), and refinancing old loans while adding new debt.
Cottonwood’s situation rests in a perfect storm. Because Cottonwood will not be able to significantly increase its revenue in the near future — revenue is projected to stay relatively flat for the next three years — any realistic solution must make significant changes to present and future employee compensation, and cutting expenses to pay down debt. The latest city update offers little comfort:
This is an advertisement
5 Comments
Take note Sedona.
Related Stories:
Debt And Water Rates, Part 1: Cottonwood Municipal Water Utility –
https://sedona.biz//news-from-cottonwood-az/debt-and-water-rates-part-1-cottonwood-municipal-water-utility/
Debt And Water Rates, Part 2: Water Under the Bridge – https://sedona.biz//news-from-cottonwood-az/debt-and-water-rates-part-2-water-under-the-bridge/
Cottonwood: 67% Water Rate Hikes and Missing Funds Questioned –
https://sedona.biz/cottonwood-67-water-rate-hikes-and-missing-funds-questioned/
Seems the writer of this may be letting personal opinion cloud actual facts. The witch hunt being conducted towards the mayor of cottonwood is pretty obvious when you claim that “almost 100 percent of the city’s income (more than $18 million) is spent on employee salaries, benefits and labor costs.”
The actual number is between 50 and 60 % of the city budget is related to salaries/benefits… a percentage that is well within normal operating range for most cities and is actually far below several.
If you keep making far fetched claims eventually folks will decide to stop fetching them.
People are welcome to their own opinions but when that leads them to creating their own facts… well then you have an issue.
JS
The current proposed Cottonwood FY 2017 documents are being presented in a way that makes it more difficult to compare the proposed level of expenditures that includes the cost of pensions and other fringe benefits and are extremely misleading. And press coverage of the proposed budget, therefore, has apparently been limited to the story the Mayor wants to tell.
A more complete picture emerges when the latest budget documents are compared with city revenues (income) and when personnel costs are compared to previous fiscal years’ personnel costs, because personnel costs can be a significant drain on city budgets Local governments are service-based governments who provide the city’s services; and that explains why the city’s budget is driven primarily by personnel costs. Another barometer of fiscal health is the city’s General Fund reserves, which have dwindled.
The problem is, Year over Year, Cottonwood’s government costs continue to skyrocket relative to the rate of inflation, the economy, the city’s population growth, the city’s income which is predicted to remain relatively flat for the next five years, and continues to far outpace the income of those who pay the bills – the taxpayers. As city managers continue to get richer and richer (see examples below)* and as the cost of city employees’ benefits grew many times greater than those who struggle to pay their bills (average per capita income in Cottonwood is $19,581 rev. 2015 U.S. Census, and the poverty rate is 24%), the gap gets bigger each year. The rise in Cottonwood’s personnel costs — including the rise in benefits and pension costs, is clearly unsustainable.
Local governments are service-based organizations so the city’s budget is driven primarily by personnel costs. From the city’s proposed FY 2017 budget, starting Jul. 1st, 2016 — — Cottonwood’s budget is $19 million for personnel costs — or $1,677 per capita (based on 11,500 population, U. S. Census rev. 2015). The estimated city income for FY 2016 is $18,333,540. In FY 2015, the city’s auditor said the city’s unfunded pension liability was $19.6 million for all workers.
CITY INCOME (REVENUES) FY 2016
13,050,320 Est. 2016 Privilege/Sales Tax 13,366,405
1,356,310 Est. 2016 State Shared Income Tax 1,444,370
1,076,180 Est. 2016 State Shared Privilege Sales Tax 1,111,240
667,580 Est. 2016 Vehicle Tax 703,780
223,485 Est. 2016 Investment Income 223,485
200,000 Est. 2016 Fines/Forfeitures 200,000
377,620 Est. 2016 Franchise Fees 377,620
846,670 Est. 2016 Hwy User Fund (HURF) 906,640
17,798,165
Est. 2016 TOTAL 18,333,540
A FEW CITY MANAGER’S PERSONNEL COSTS:
1) * CITY ATTORNEY, STEVE HORTON – HIGHEST PAID CITY BOSS (Contract): $244,140 (FY 2017 Salary $182,957 + $61,183 IN BENEFITS). What is interesting is the fact that Horton also contracts out $190,000 of legal services — including $90,000 to pay a Prosecuting Attorney and he can pay $100,000 in other legal services. Per his 5-yr. contract, Horton is allowed to work out of his home in Flagstaff and have a second source of income of (10 hrs. a week working for a School District). HORTON’S COSTS TO THE CITY INCLUDE: His Vehicle Allowance 5,400, Merit Contingency 8,393 (Salary Increase), Retirement 22,590, Insurance & Taxes 24,800 and his Employee Related Expenses.
2. CITY MANAGER, DOUG BARTOSH: $169,343 SALARY + Benefits + Car Allowance
3. WATER RESOURCES AMINISTRATOR, TOM WHITMER (IS MANAGING THE RIVERFRONT WATER RECLAMATION CENTER PROJECT): $165,370 SALARY & BENEFITS
4. ADMINISTRATIVE SERVICE GENERAL MANAGER (FNANCE DIRECTOR), RUDY RODRIGUEZ: $134,033 + BENEFITS
PUBLIC WORKS MAINTENANCE TECH I: $135,296 SALARY + BENEFITS
CITY PLANNER $131,390 SALARY + BENEFITS
COMMUNITY SERVICES GENERAL MANAGER: $127,826 + BENEFITS
CITY CLERK, MARIANNE JIMENEZ: $108,123 SALARY + BENEFITS
FIRE CHIEF: $108,597 SALARY + BENEFITS
PRESIDING MAGISTRATE (JUDGE), DOUGLAS LASOTA: $115,700 SALARY + BENEFITS
POLICE CHIEF: $114,999 SALARY + BENEFITS
POLICE RECORDS CLERK: 84,629 SALARY + BENEFITS
(FOR COMPARISON PURPOSES, COTTONWOOD HAS 20 FULL TIME POLICE OFFICERS WHO AVG. $54,000 A YEAR SALARIES FROM $3,601 TO 5,306 MONTH + BENEFITS)
IT MANAGER: $92,109 SALARY + BENEFITS
ECONOMIC DEVELOPMENT MANAGER, CASEY ROONEY: $101,841 SALARY + BENEFITS
ACCOUNTING BUDGET MANAGER: $99,838 SALARY + BENEFITS
Budgeting will continue to be, an ongoing process of revenue and expenditure choices that affect services, public employee welfare, and conditions for future economic growth. The more the city taxes its taxpayers, the less spendable income they have, which is already putting a drain on economic growth.
The current proposed Cottonwood FY 2017 documents are being presented in a way that makes it more difficult to compare the proposed level of expenditures that includes the cost of pensions and other fringe benefits and are extremely misleading. And press coverage of the proposed budget, therefore, has apparently been limited to the story the Mayor wants to tell.
A more complete picture emerges when the latest budget documents are compared with city revenues (income) and when personnel costs are compared to previous fiscal years’ personnel costs, because personnel costs can be a significant drain on city budgets Local governments are service-based governments who provide the city’s services; and that explains why the city’s budget is driven primarily by personnel costs. Another barometer of fiscal health is the city’s General Fund reserves, which have dwindled.
The problem is, Year over Year, Cottonwood’s government costs continue to skyrocket relative to the rate of inflation, the economy, the city’s population growth, the city’s income which is predicted to remain relatively flat for the next five years, and continues to far outpace the income of those who pay the bills – the taxpayers. As city managers continue to get richer and richer (see examples below)* and as the cost of city employees’ benefits grew many times greater than those who struggle to pay their bills (average per capita income in Cottonwood is $19,581 rev. 2015 U.S. Census, and the poverty rate is 24%), the gap gets bigger each year. The rise in Cottonwood’s personnel costs — including the rise in benefits and pension costs, is clearly unsustainable.
Local governments are service-based organizations so the city’s budget is driven primarily by personnel costs. From the city’s proposed FY 2017 budget, starting Jul. 1st, 2016 — — Cottonwood’s budget is $19 million for personnel costs — or $1,677 per capita (based on 11,500 population, U. S. Census rev. 2015). The estimated city income for FY 2016 is $18,333,540. In FY 2015, the city’s auditor said the city’s unfunded pension liability was $19.6 million for all workers.
CITY INCOME (REVENUES) FY 2016
13,050,320 Est. 2016 Privilege/Sales Tax 13,366,405
1,356,310 Est. 2016 State Shared Income Tax 1,444,370
1,076,180 Est. 2016 State Shared Privilege Sales Tax 1,111,240
667,580 Est. 2016 Vehicle Tax 703,780
223,485 Est. 2016 Investment Income 223,485
200,000 Est. 2016 Fines/Forfeitures 200,000
377,620 Est. 2016 Franchise Fees 377,620
846,670 Est. 2016 Hwy User Fund (HURF) 906,640
17,798,165
Est. 2016 TOTAL 18,333,540
A FEW CITY MANAGER’S PERSONNEL COSTS:
1) * CITY ATTORNEY, STEVE HORTON – HIGHEST PAID CITY BOSS (Contract): $244,140 (FY 2017 Salary $182,957 + $61,183 IN BENEFITS). What is interesting is the fact that Horton also contracts out $190,000 of legal services — including $90,000 to pay a Prosecuting Attorney and he can pay $100,000 in other legal services. Per his 5-yr. contract, Horton is allowed to work out of his home in Flagstaff and have a second source of income of (10 hrs. a week working for a School District). HORTON’S COSTS TO THE CITY INCLUDE: His Vehicle Allowance 5,400, Merit Contingency 8,393 (Salary Increase), Retirement 22,590, Insurance & Taxes 24,800 and his Employee Related Expenses.
2. CITY MANAGER, DOUG BARTOSH: $169,343 SALARY + Benefits + Car Allowance
3. WATER RESOURCES AMINISTRATOR, TOM WHITMER (IS MANAGING THE RIVERFRONT WATER RECLAMATION CENTER PROJECT): $165,370 SALARY & BENEFITS
4. ADMINISTRATIVE SERVICE GENERAL MANAGER (FNANCE DIRECTOR), RUDY RODRIGUEZ: $134,033 + BENEFITS
PUBLIC WORKS MAINTENANCE TECH I: $135,296 SALARY + BENEFITS
CITY PLANNER $131,390 SALARY + BENEFITS
COMMUNITY SERVICES GENERAL MANAGER: $127,826 + BENEFITS
CITY CLERK, MARIANNE JIMENEZ: $108,123 SALARY + BENEFITS
FIRE CHIEF: $108,597 SALARY + BENEFITS
PRESIDING MAGISTRATE (JUDGE), DOUGLAS LASOTA: $115,700 SALARY + BENEFITS
POLICE CHIEF: $114,999 SALARY + BENEFITS
POLICE RECORDS CLERK: 84,629 SALARY + BENEFITS
(FOR COMPARISON PURPOSES, COTTONWOOD HAS 20 FULL TIME POLICE OFFICERS WHO AVG. $54,000 A YEAR SALARIES FROM $3,601 TO 5,306 MONTH + BENEFITS)
IT MANAGER: $92,109 SALARY + BENEFITS
ECONOMIC DEVELOPMENT MANAGER, CASEY ROONEY: $101,841 SALARY + BENEFITS
ACCOUNTING BUDGET MANAGER: $99,838 SALARY + BENEFITS
Budgeting will continue to be, an ongoing process of revenue and expenditure choices that affect services, public employee welfare, and conditions for future economic growth. The more the city taxes its taxpayers, the less spendable income they have, which is already putting a drain on the city’s economic growth.