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Print Town faces $1.8M shortfall
Written by Mark Lineberger   
Wednesday, 06 February 2008 12:51

Camp Verde is facing a $1.8 million shortfall this year thanks to a budget process that was “shoddy and incomplete,” Town Manager Michael Scannell told the Town Council last week.

The revelation comes on the heels of an auditor’s report that the town’s finances suffer from a severe lack of internal controls.

The shortfall is the result of several factors, including lower than expected sales tax revenue, about $360,000 less, and a slowdown in the overall economy. As a result, the town has issued fewer building permits than town leaders had counted on when formulating this year’s budget.

The budget also didn’t set aside the $170,000 needed this year to pay the debt down on the new Camp Verde Marshal’s Office.

Events are also costing the town money, and Scannell said sponsoring so many events is expected to create a loss of $110,000.

While there are several anomalies in the budget contributing to the shortfall, a huge part of the problem can be traced to the town’s Arizona Highway User Revenue Funds — the fund the town uses to pay for public works improvements.

The town is obligated to pay the Camp Verde Sanitary District $240,000 from the HURF fund to help resurface streets torn up in the recent sewer expansion project.

The Town Council was told it had $1 million in the fund. It turns out the fund was actually in the red with a negative balance of $140,000.

Scannell, on the job since October, has been serving as a de facto finance director following the resignation last year of former director Dane Bullard.
It’s not all doom and gloom, Scannell told the Town Council. While he said the town may be forced to make some “painful decisions,” he and other department heads have a plan than could potentially get Camp Verde out of this financial quagmire.

“I didn’t come here to preside over the demise of Camp Verde,” Scannell said.

Among the ideas to help keep the town afloat are:

  • Suspending new money into the town’s parkland acquisition fund.
    Currently, the town channels a portion of sales tax revenue into the fund for obtaining new land for a potential park.
  • Scannell estimates the town could redirect that money into the general fund for a cash infusion of $270,000.
  • Keeping an eye on how much the town uses its attorneys. The town is on track to spend $20,000 less than projected this year on legal fees.
  • Starting with Fiscal Year 2008-09, Scannell wants the responsibility for using the attorney put on the heads of each town department.
  • Giving up the town’s goal to buy the Camp Verde Water System, at least for now. The town has saved $450,000 to eventually buy the water company, money that could be freed up to help with the shortfall.
  • Transferring money. Scannell is recommending that the town move $722,000 from the town’s capital outlay fund into the HURF to help get the budget back on track.
  • Keeping the purse strings tight. Scannell said the town’s management team has looked carefully at the spending habits of each department and figures the town could cut expenditures by as much as $300,000.
  • Dropping sponsorship of so many events. Scannell said that while promoting Camp Verde is important, he is suggesting the town limit its involvement to two or three a year.

Along with some other unexpected income and a few other cost cutting suggestions, Scannell said he feels confident the town can make ends meet for the remainder of Fiscal Year, 2007-08.

The town will keep a close eye on the budget month by month, Scannell said, making any adjustments needed as the end of the fiscal year approached in June.

The council put its confidence behind Scannell, directing him to do what has to be done to keep things running.

While relieved that it looks like the town will be able to cover the budget for the rest of the Fiscal Year, Councilwoman Norma Garrison wasn’t happy that the town’s finances had gotten to this point in the first place.
“This is the most information on town finances I’ve had since I’ve lived in this town,” Garrison said. “I was told that we have an audit every year to serve as a safeguard …. Why wasn’t that giving me the bad news?”

Garrison said this latest round of bad news had shaken her faith in the auditing process.

“Somebody failed this town,” Garrison said. “Something has failed drastically. It’s been a gradual path this town has walked on until it all just fell apart.”

Scannell said he’d prefer to move forward looking how to fix things for the future, rather than spending too much time looking for a root cause of the town’s financial problems.

Mayor Tony Gioia said while he wouldn’t rule out looking at the failure of the budgeting process, he would also prefer to look forward and, armed with this knowledge about the true state of the town’s finances, prevent the mistakes of the past.

“There were the dark ages, the middle ages and then came the Renaissance,” Gioia said. “Fiscally, I believe we are starting Camp Verde’s Renaissance.”