By Sandy Moriarty, Mayor
Sedona AZ (May 25, 2017) – April in Sedona brings spring showers, the end of tax season, and at the city it brings budget time. Sedona is a small city with limited resources and, as the most beautiful place on earth in so many ways, an economic engine we are all familiar with, tourism. So when we look at our revenues and expenditures for the past year and plan for the coming year, we consider the needs of both our residents and our visitors. Many, if not most, residents vacationed here, loved it, and decided to move here, and they assume that a major source of city revenue comes from property taxes. After all, that’s how it was back home.
Actually, that is not the case. Although you will see “Sedona” on your tax bill, a closer look will reveal those taxes are for the school district or fire district rather than the city of Sedona. Sedona is a relatively young city and has never had a property tax. Instead we rely on sales taxes. including bed taxes, revenue sharing from taxes collected by the state, and various other fees to pay for vitally important services and programs.
When you look at the city budget you will see that the overall budget is made up of different components. There is the operating budget, capital budget, and wastewater budget. The operating budget is home to most of the city departments we are all familiar with such as police, community development, and parks and recreation. Although you may hear it said that we are spending more that we take in, that is simply not correct. The truth is that because we develop the operating budget using very conservative assumptions we have had surpluses – money we haven’t spent – at the end of every year, even during the recent recession. At the end of each year, those surpluses are moved into the capital budget, which is like a savings account, so they can be used in future years for planned capital spending.
If you look at the operating budget for any one year, you may see that we have included expenditures for capital items such as new police vehicles, playground equipment or improvements at the Dog Park. When that happens, funds are transferred from the capital budget account to the operating budget account to pay for these capital expenses; while it may appear that we are spending more than we took in during the year, in fact the capital items were funded from previous operating surpluses.
The wastewater budget is strictly to build and operate our sewer system. The bulk of revenues in the wastewater budget come from monthly fees and connection fees paid by residents and businesses in Sedona. In the next 10 years wastewater operations are expected to be funded entirely by wastewater fees.
In addition to the funds we keep in the virtual “savings account” that is our capital budget we have another virtual savings account in the form of our Reserve Fund, established several years ago when the city adopted a policy to maintain a fund equal to 50 to 75 percent of our operating budget. This is sometimes referred to as a “rainy day fund.” Our Reserve Fund far exceeds the recommendations of the Government Finance Officers Association. which is no less than two months of regular General Fund operating revenues or expenditures. Sedona’s policy is more conservative than most other cities in Arizona. A survey of neighboring cities shows a range of options from 15 to 25 percent for rainy day funds; Cottonwood, for instance, follows the two-month guideline but keeps a minimum of $1 million in capital reserves.
The city of Sedona submits to annual audits performed by independent experts in financial reporting. These audits ensure that city financial practices meet or exceed accepted accounting standards for transparency and accuracy in financial disclosures. Our Comprehensive Annual Financial Reports win awards for their thorough and detailed presentation of the city’s financial condition.
I hope this article helps to clarify the fact that the city of Sedona never runs a deficit and always budgets responsibly. We never spend more money than we take in.
Thanks for the clarification Sandy, if anyone knows the budget/accounts its you.
Last Friday’s Red Rock News published the PUBLIC NOTICE, CITY OF SEDONA TENTATIVE BUDGET 2017-2018 FISCAL YEAR, on Page 12A.
At $47,752,118 Budgeted Expenditures exceed Estimated Revenues of $37,762,477 by a negative $9,989,641.
General Fund Total Revenues, $26,478,260 at the beginning of the fiscal year, are listed as $10,423,121 at year-end. [City Personnel costs are projected to increase by 14 percent. FY 17 Budget, $11.128 million. FY18 proposed, $12.648 million.]
Total Wastewater Funds: $14,792,197 Beginning Fund Balance. $11,308,576 Ending Fund Balance.
Total Capital Projects Funds: $13,839,573 Beginning Fund Balance. $7,547,681 Ending Fund Balance
City budgets received a “Distinguished Budget Presentation Award” on July 1, 2013 and July 1, 2014.
Voters approved Total Expenditures of $32,472,137 for 2017-2018 via the May 2014 Home Rule Election. This is 49% lower than the 2017-2018 Total Budgeted Expenditures of $47,752,118.
Council member John Currivan, a former attorney, has stated the budget is not balanced and the City is spending more than it is taking in.
A flood of U.S. cities are similar to Sedona. I.e., they have sales taxes but no property taxes.
Turbulent winds may be gathering at City Hall. Last month the City Council and City ‘Manager’ discussed an increase in the City sales tax of from 1/4 percent to 1 percent. And didn’t the non-transparent Citizen Engagement Revenue Forecasts Work Group–Jennifer Wesselhoff is a participant–hold a meeting with the City’s bond expert recently?
In my opinion, it’s a crime there’s No Disclaimer of Opinion in the Mayor’s so-called “A sensible, responsible city budget” article.
If I recall correctly, you saw this coming… so did others on our City Council. What to do?
The explanation is just that, words. Where are the numbers. Jean just brought the numbers forward.
If in my business, or in my current position as a the chairman of the audit committee of a $4 billion company heard management explain that all is fine, we are losing money but we can take our reserves (rerained earnings) and make it better.
Somebody gets fired. If the city has so much money in reserves, maybe a temporary sales tax REDUCTION relieving the tax burdrn to the citizens is appropriate.
But it doesn’t seem to have all these reserves if you are taking in less than you are spending. I don’t care who you are that’s not a balanced budget.
I also believe that there are substantial capital projects that are not funded to their completion. Building MORE reserves is what you do, not come up short and use these funds.
Inflation…1% maybe? City personnel budget increasing 14% ??? The population of Sedona is NOT increasing. This reeks of incompetence and mismanagement.
Michael Schroeder said. Inflation maybe 1%, City personnel budget increasing 14% ??? The population of Sedona is NOT increasing.
This reeks of incompetence and mismanagement.
Mike, that’s because the citizens of Sedona do not pay the majority of taxes. Visitors do, and the city needs to keep growing even when population doesn’t.
Said Mayor Sandy, “Our Reserve Fund far exceeds the recommendations of the Government Finance Officers Association”
Sedona tax income is way up and the city is using it along with reserves to start some long postponed projects. In a city like Sedona there are projects stacked up waiting for funding
Cities are NOT businesses and should NOT be run like them. Cities supply “SERVICES” for their citizens, and the visitors.
From my experience the city of Sedona is better managed than any business I have ever been involved with.
Mike, being on a budget committee does not make you an expert on civics.
Jean has been saying the sky is falling for over 20 years, look around Sedona is a huge success, business is booming and tax income is up.
Mike and Jean, Not everyone thinks government should shrink, that regulations are bad, and some of us even want government grow to service the need of the citizens.
We have a city manager and elected city council that oversee every expenditure.
Sedona is lucky it has a strong economic engine, but a little more money from locals would be nice. I think the idea of a 1% sales tax should be looked at and well as a tax on Jeep and other activities, and then we can look at public transportation and much needed road repair. Ha , I’m even for a city tax but that is just me, I like to may my own way.
What to do?