By Cherie R. Wright, CPA, CFE, CGFM, Director
Sedona AZ (April 4, 2016) – Spring can be a season of change, and the city of Sedona’s Financial Services Department is experiencing several changes – from staffing and legislative changes to budget methodology and accounting changes.
The top two positions in the department have been recently filled, and with new personnel come new ideas and a reassessment of processes and efficiencies. The department as a whole is seeking ways to improve and streamline processes, while ensuring proper checks and balances are in place for safeguarding the city’s resources.
State legislation also required a recent change in the payment and collection of transaction privilege tax. Generally referred to as sales tax in other states, in Arizona the correct term is transaction privilege tax (TPT). The State passed legislation that required the city of Sedona to turn over collection of TPT to the State for reporting periods beginning Jan. 1, 2016 as part of the TPT Simplification Task Force recommendations. The State has delayed the implementation of this change for the remaining 14 self-collecting cities in the state while the technology infrastructure is expanded to accommodate the increased workload.
Information regarding the changes to the TPT payment process has been mailed to all licensed businesses within the city of Sedona and all registered TPT payers in the city’s records. If a taxpayer has any questions, they are encouraged to contact the Arizona Department of Revenue or the city’s Financial Services Department.
The city continues to process and collect TPT payments for reporting periods ending Dec. 31, 2015 and prior. Any unpaid amounts for reporting periods ending Dec. 31, 2015 and prior are now delinquent, and taxpayers who need to file or pay for past reporting periods are encouraged to contact the city’s Financial Services Department.
The city operates on a fiscal year from July 1 to June 30, and the city’s planning for the next fiscal year begins in December each year. The Financial Services Department prepares a five-year forecast of expected revenues and known expenditures, and the Sedona City Council assesses goals and priorities for the next fiscal year. The forecast and Council goals and priorities guide the development of the city’s budget.
For the fiscal year 2016-17, the city is embarking on a three-year implementation process for enhancing its budgeting methodology. Previously, the city’s budget process utilized the “line item” method of budgeting. This method focuses on how much is spent in each line item (e.g., office supplies, utility costs, equipment repairs, etc.). The city is changing to a program budgeting methodology, which focuses on the city’s goals, the performance measurements in achieving those goals and the values obtained for the resources utilized. The City Manager discussed this change in methodology at the Jan. 7, 2016 City Council meeting, and the Council wholeheartedly agreed that the program budgeting method provides a better focus for basing Council decisions on the value and effectiveness of programs and services provided.
This change in methodology is planned for a three-year phased implementation. In this first year, departments are identifying each of the significant services and programs that are offered, and the Financial Services Department is modifying the accounting structure to better account for the revenues and expenditures of those services and programs. This first step will be instrumental in building historical data that can be used in later years for benchmarking performance.
Each of the city’s departments then assesses their budget needs by service or program for the next fiscal year, evaluating the alignment with Council goals and priorities, and submits their requests for operating and capital needs. Any requests for new programs or projects are separately requested as a “decision package.” Significant capital expenditures are budgeted as part of the city’s six-year Capital Improvement Plan. These expenditures are defined as acquisition, construction or extension of the life of a capital asset, costing more than $50,000 and having a useful life of at least five years.
The department requests are compiled and summarized for review by the City Manager and the Citizen’s Budget Work Group. Meetings were held with departments on March 15 and 16, 2016, to provide the City Manager and the Citizen’s Budget Work Group an opportunity to better understand and to provide input regarding the operating budget requests. The six-year Capital Improvement Plan was reviewed with departments on April 6, 2016.
The budget requests are refined and adjusted based on the feedback provided, and prioritizations from an organization-wide perspective are preliminarily identified for each of the department’s decision packages. The objective is to present a recommended budget to Council that is balanced with projected revenues and aligns with Council goals and priorities. The Council budget work sessions are scheduled for April 27 and 28, 2016. All interested citizens are encouraged to attend these budget work sessions.
Once fully implemented, we expect all of these changes will bring improvements and efficiencies to the city’s operations, and we are looking forward to the enhanced information that will be provided to our staff, management, City Council and citizens. For more information, call the Financial Services Department at 204-7185 or visit us online at SedonaAZ.gov/Finance.
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