At a budget meeting on April 24, Deputy City Manager Rudy Rodriguez told Cottonwood City Council that the city’s budget is unbalanced.
In a presentation prepared by the city’s Accounting and Budget Manager Kirsten Lennon on the budgets of fiscal years 2018 and 2019, Rodriguez explained that in FY 2019, Cottonwood’s general fund faces a shortfall of $1,578,075. In Rodriguez’s view, that shortfall will not be able to be met easily through cutting spending.
“We’re at a point where it’s not about expenditures, it’s about revenues,” Rodriguez told council. He discussed how similar shortfalls often come up in the city’s budgets, but that usually, the city would find things to cut, would push back projects to next year or would forego hiring new and often necessary employees. “These budgets are really slim, and to be really, brutally honest, if you do across the board cuts, the ones that are going to suffer are PD [the police department] and fire because they happen to be the largest ones. You can’t very well try to recover a million dollars off of small budgets.”
After looking at the budget to find other places that some money could be saved, the council came around to Rodriguez’s way of thinking.
“We’ve got to talk the sales tax,” said Vice Mayor Kyla Allen. “People are scared to talk about it, and I’m not scared to talk about it. We’ve got other communities around us that are charging more for sales tax that do less.”
At 3 percent, Cottonwood’s sales tax is lower than many of the surrounding communities. Camp Verde’s sales tax is 3.65 percent, while Sedona’s and Jerome’s are 3.5 percent.
Cottonwood also does provide a higher level of government services than some of its neighbors — unlike many of the nearby communities, Cottonwood funds a fire department through its general fund, rather than having a separate fire district funded through a property tax. Facilities like the library, recreation center and airport also cost money.
The budget presentation estimated that a 0.25 percent sales tax increase would lead to raising around $1.2 million, while raising it by 0.5 percent would raise $2.5 million. These increases would lead to total sales tax burdens, including state and county taxes, of 9.60 percent and 9.85 percent, respectively.
The council hopes to still find ways to cut some of the city’s spending in order to keep a sales tax increase small. They discussed the possibility of reforming the merit pay system for city employees, in order to pay smaller raises this year.
They also discussed grants to local agencies, reviewing some of them to see which could be consolidated or shrunk as line items in the city’s budget. But the council acknowledged that certain new employees, such as a new building official, business specialist and accounting specialist, need to be hired, especially with the hopes that good employees in some of these departments can save money in the long run.
Council members acknowledged that a sales tax can be difficult, and doing so with some on the city council up for re-election this year can always be fraught.
“I live in the city of Cottonwood and I don’t have a million dollar house. I live in the low-rent district,” Allen said. “Sales tax will affect me when I go out and I do my purchases. But I also know that we’re providing services to citizens. This is what they want. They’re not getting nothing for something.”
Council members discussed the possibility of finding a special project that could be paid for with the sales tax increase, in order to ensure that residents feel they are getting something good in return for paying more. They are also hoping that increasing some fees collected by the town can allow a smaller increase.
“For the last probably five years during the down economy, we’ve been asking previous councils that we need to do something,” Rodriguez said. “I was trying to get ahead of it back then, trying to do something, but the council is always reluctant to do anything with revenues, to push them up any higher because they always felt that we live in an area that has low income. We’re at a point where we can’t keep it up much longer. Something’s gotta give.”
Jon Hecht can be reached at 634-8551, or email jhecht@larsonnewspapers.com
