By Sherry Twamley, Cottonwood Resident
(May 29, 2016)
The current proposed City of Cottonwood FY 2017 documents are being presented in a way that makes it more difficult to compare the proposed level of expenditures to income (revenues) 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. The budget is what the city wants to spend, including proceeds of loans.
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 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, yet the number of employees continues to grow.
The proposed FY 2017 budget shows that Cottonwood plans to make no decreases in personnel costs. Instead the city will hire five new full time employees and increase the maximum salary ranges by 1.7 percent (as compared to the national inflation rate of 1.4 percent).
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.
As a result of the Great Recession, evidence suggests that Arizona cities are more fiscally conservative than in recent years and are cautiously preparing for the next economic downturn.
The city has no property tax, it relies on about 60 percent of its income from sales taxes mainly from tourists and outside residents — making Cottonwood significantly vulnerable to the next downturn in the economy.
The city finance department has projected a General Fund fiscal shortage for the next five years.
This five-year analysis of the General Fund demonstrates that operating revenues will not keep up with operating expenditures for the next five years.
This reflects the City’s inability to substantially increase the current revenue streams via rate increases or through diversifying the current revenues with additional fees or charges for services.
The present economic situation will also stifle future revenue generation.
Other issues that are out of the City’s control are some of the rising employee benefits costs. Health insurance costs for employees and their dependents will increase after July 1, 2015.
A 2% increase is reflected in this forecast. Worker’s compensation will see a slight increase in FY 2017 as will both Retirement Systems.
There are required capital reserves that need to be met. To fund these reserves, the General Fund will run a deficit in current operating expenditures that will have to be covered by fund balance.
That too poses a different set of issues. The S.A.F.E.R. Grant revenue, which funded 90% of the cost of 12 new firefighters in 2010, was completely eliminated in FY 2014. At this time, the City is solely responsible for funding these firefighters.
The Recreation Center has been fully operational since FY 2011 and is forecasted to cover slightly below 60% of its expenditures through its own revenue stream.
A new Regional Emergency Communications Center was built in FY 2015 that will increase the General Fund Expenditures due to additional employees and facility maintenance. These costs are not fully covered by Dispatch Fees.
15 Comments
I think the voters should take a VERY CLOSE look at current Cottonwood government officials looking at running for higher offices in the county.
The last thing Yavapai County needs is irresponsible fiscal management.
Since Cottonwood Mayor Diane Joens took office in June, 2003, the City of Cottonwood’s indebtedness skyrocketed by 652% — including a $19.6 MILLION Iunfunded pension debt for all workers.***
2004-05 Total Indebtedness: $9,170,000. Per Capita Debt: $895.51 (Ranked #34 of 91 cities)
2015 Total Indebtedness: $61,000,000. Per Capita Debt: $7,004 (Includes $5,304 per capita debt + $1,704 per capita unfunded pension debt ($19,600,000).*** This equates to a total per capita debt of $7,004.
Interest on these long term loans could easily double the city’s total indebtedness.
2015 CITY OF COTTONWOOD’S PRINCIPAL DEBTS BROKEN OUT:
Original Principal Incurred 10/4/2004 to 6/19/2015: $80,087,154
Principal Paid $12,520,000 (includes $10,040,000 refunded by WIFA 2004 Bond Refinance).
2015 Outstanding Principal Debts & Leases (Long Term Debt): $61 million
Per capita debt: $7,004 (U. S. Census rev. 2015 Population Est. 11,500).
*Sources: Sept. 2015 Report of Indebtedness Made to the Arizona State Treasurer’s Office available on the City of Cottonwood’s website ( )
***UNFUNDED PENSION LIABILITY SOURCE: $19,600,000 UNFUNDED Pension Liability for All City Workers:
It’s not only Cottonwood’s government costs that continue to increase Ditto for Sedona. The “Bond deal drops budget 27%” article in last Friday’s RRN states “While the [tentative] budget decreased, the overall expenditures increased by 17% from $16.08 million to $18.83 million.” What!! Economists tell us as a City’s budget increases so do its future taxes and fees.
Assistant City Manager Karen Daines said: “In 2016 we planned for a large general fund bond refinance which required us to include the estimated payoff of the old debt–or $9.3 million in the budget.” In fact, the refi was a wash entry in the current-year GF operating budget. $9.3 million in old bond debt was paid off and replaced with $9.3 million in new bond debt, but at a little lower interest rate.
Per next fiscal year’s Tentative Budget, Total Expenditures ($38.36 million) exceed Total Revenues ($33.21 million) by $5.15 million. Giving the Chamber of Commerce $1.73 million, hiring more staff, and a greater focus on community development and the 13 high-density community focus areas are included, as well as a 1.8% cost-of-living adjustment and 2.5% merit increases for City staff. There’s no maintenance of strong reserves to ensure long-term financial stability or cure the City’s under-investment in roads and drainage infrastructure.
“The final budget will be approved Tuesday, June 28.”
What!! Economists tell us as a City’s budget increases so do its future taxes and fees.
Well thank god you pay no city tax JJ, Bed and sales tax pay for your share, up over 17% , sorry Jean no bad news about Sedona today time to pick on Cottonwood.
ss
Since Cottonwood Mayor Diane Joens took office in June, 2003, the City of Cottonwood’s indebtedness skyrocketed by 652% — including a $19.6 MILLION Iunfunded pension debt for all workers.***
2004-05 Total Indebtedness: $9,170,000. Per Capita Debt: $895.51 (Ranked #34 of 91 cities)
2015 Total Indebtedness: $61,000,000. Per Capita Debt: $7,004 (Includes $5,304 per capita debt + $1,704 per capita unfunded pension debt ($19,600,000).*** This equates to a total per capita debt of $7,004.
Interest on these long term loans could easily double the city’s total indebtedness.
2015 CITY OF COTTONWOOD’S PRINCIPAL DEBTS BROKEN OUT:
Original Principal Incurred 10/4/2004 to 6/19/2015: $80,087,154
Principal Paid $12,520,000 (includes $10,040,000 refunded by WIFA 2004 Bond Refinance).
2015 Outstanding Principal Debts & Leases (Long Term Debt): $61 million
Per capita debt: $7,004 (U. S. Census rev. 2015 Population Est. 11,500).
*Sources: Sept. 2015 Report of Indebtedness Made to the Arizona State Treasurer’s Office available on the City of Cottonwood’s website ( )
***UNFUNDED PENSION LIABILITY SOURCE: $19,600,000 UNFUNDED Pension Liability for All City Workers:
More BS from Steve Segner about City of Sedona tax revenue. Stated in Ron Budnick’s campaign letter for the 2014 Council elections:
“FIFTY-FIFTY. Most people in Sedona believe tourists provide the bulk of the tax revenue. While a member of the Budget Oversight Commission, I produced a report using the computer run of business codes that showed that residents provide 50% of the tax revenue and tourists provide the other 50%. Sewer taxes, vehicle license taxes, state income taxes, and state sales taxes that relate primarily to residents must be considered.”
Oh Jean 2014 really? What about Karen Danes she gave me the numbers and she is ast. City manager !
And not 2014 Jean any time you want to meet me at the city happy to help you understand the numbers at least you admit you pay no city tax ,
2014……..really well you tried
Ss
The news of a 27 percent decrease in next fiscal year’s Tentative Budget while overall expenditures increase by 17% from $16.08 Million to $18.83 is abracadabra in my opinion.
Budgeted departmental costs paid for out of the Wastewater Fund next year:
$47,950 (10% of City Manager’s salary + !0% of Asst City Mgr’s salary)
$19,440 Human Resources
$406,520 Financial Services
$87,577.80 Information Technology
$21,090 City Attorney’s Office
$12,650 City Clerk’s Office
$3,316,903 Public Works & Engineering
$5,516,089 Wastewater Administration
$65,200 Wastewater Capital
$2,611,224 Wastewater Operations
Will departmental costs be added to residents’ bills once the preordained City-wide residential garbage removal system is up and running? Karen Daines has not answered my question. Ditto the two other questions regarding double-billing of the Wastewater Fund.
Included in sewer customers’ monthly service rate bills: Wastewater Operations and Maintenance costs including [Wastewater] Administration, Salaries and Benefits, Supplies and Services–as well as Capital Improvement Program project costs.
Wait… Sherry Twamley is claiming to be a Cottonwood resident? The only 4 parcels owned by a Twamley are located in the unincorporated Verde Village… according to the Yavapai County GIS system.
So to be clear Verde Village is not Cottonwood.
It is pretty clear that Ms. Twamley seems to have a fairly extensive personal issue with the City and it’s council/staff, perhaps so much so that it might lead to a bit of over extrapolation or exaggeration of the actual facts?
We thinks thou doth protest just a little too much for this to really be about financial issues.
Apparently Mr. Smith aka Bartosh and Gesell, live in a foreign country.
Are they not aware Mayor Joens is running for County Supervisor? And the fact that Verde Village has a Cottonwood mailing address? Nice try.
Hmmmm…City officials posting on Sedona.biz again. Did you forget Mayor Joens is running for COUNTY supervisor? And that Verde Village has a Cottonwood mailing address? Maybe next time you should use your GIS again to look up zip codes.
Yes, I have heard from Karen Daines.
In reading the “City of Sedona Residential Trash/Recycling FACT SHEET,” I see where one key economic benefit of a City-wide trash and recycling program is reducing costs and financial risks by “one bill to the City versus bills to many households.”
Won’t one bill to the City involve hiring a clerk to handle billing, customer service, deadbeats and supplies; the development of a computer system by the IT Department; monetary support of Sedona Recycles, Inc.; poor planning and financial risks–all with costs wending their way to residential trash bills at some point?
No conspiracy here, just an average John that has seen enough to tell that this issue seems to be more personal than professional in many ways.
But please continue, the louder and more extreme your proclamations are the more obvious the issue becomes that it’s not really about finances and more about needing something to do or somebody to despise.
Be well and best of luck sorting out the real issues.
JS
JS – You are wasting your time, buddy. Numbers match city docs.
Many Cottonwood residents can’t vote in Cottonwood elections. Think about that for a few moments. If you live in 86326, you live in a Cottonwood, AZ 86326 mailing address, where more than the population of city residents live (estimated more than 12,000 residents live in Verde Village), so a majority of Cottonwood’s residents cannot vote for the people who make decisions on what is paid in their sales tax (3%), water bills, and so many other issues that effect the daily life of folks who work, shop, or conduct business within the city limits.
IN 2004, Mayor Joens condemned two outside water companies in Yavapai County — illegally, without VOTER AUTHORIZATION per A.R.S. 9-514 — Cordes Lakes Water Company in the Verde Village, which served the Verde Village FOR 30 YEARS, IN HER QWEST FOR POWER AND GREED. She did not stop there. She acquired SIX WATER COMPANIES AND STUCK THE $72 MILLION BILL ON THE WATER BILL PAYERS FOR 30 YEARS — in her qwest for power and control to own all of the Verde Valley private water companies!!! One of the water companies Mayor Joens acquired with the water bill payers’ wallet was the Spring Creek Water Company in Page Springs! The city has never used one drop of the water, according to Roger Biggs, Cottonwood water utility manager. All this could have never happened if the state had a limitation on the amount of revenue bonds a municipality can issue! Cottonwood has more than $80 million in principal debt. 67% OF THE CITY’S WATER COMPANY DEBTS are paid by YAVAPAI COUNTY RESIDENTS, NOT CITY RESIDENTS, including the debt payment for the Cottonwood Recreation Center, the Regional Communications Center, 12th Street road improvements and everything else in the city. Water rates have skyrocketed A WHOPPING 400% to 600% under her authoritarian rule. Now she is running for supervisor to take her former boss’ job to do the same to District 3 Yavapai County residents!!!! What she forgets to tell the voters is that she was asked to leave the county supervisors office after taking credit for everyone else’s job and not doing her job!!!
While I can hardly blame residents of Verde Village or Verde Santa Fe for vehemently refusing another layer of government via annexation, I often wonder if it is fair for those residents to have NO voice in so many issues impacting life in Cottonwood where the horrible decisions were made to crucify the county rate payers!