Who knew John Lennon’s “Imagine” would apply to municipal finance?
“You may say I’m a dreamer. But I’m not the only one.”
In looking at local municipal budgets over the last few years it would appear that financial departments dream big, plan for half and settle for one-third.
For instance, in the 2015-16 fiscal year, Cottonwood’s original budget — aka “if the gods are kind and we win every grant we apply for and build everything we want” was more than $117 million.
The Cottonwood City Council cut some projects and funds from the budget and settled on a revised budget of nearly $73.9 million. But at the end of the fiscal year, the city had only collected and spent $36.6 million.
That’s the equivalent of wanting a Ferrari California T, approving a Porshe 911 Carrera but only having enough money to buy a Ford Fiesta.
If the city approves a revised budget of $74 million in June, but doesn’t win half the grants and funds it asks for, but it takes a full year before officials and taxpayers can realize the budget is less than half that at $36 million, how on earth can anyone determine whether the city is being fiscally conservative?
There are a handful of budget-watching residents who loudly criticize the budget planning of Cottonwood, accusing city officials of fiscal mismanagement or even corruption, not because there is any actual evidence of such but because the budget planning process makes no sense to the average taxpayer, let alone journalists whose job it is to make sure governments are transparent.
Cottonwood officials would probably face fewer headaches from residents if its budgets were not comprised of unreachable pipe dreams, refinancing options and projects that never get completed, let alone started.
The town of Clarkdale has the same problem, with lower totals due to a smaller population and tax base: The approved budget has been consistently three times larger than actual with the exception of 2012-13, when it was only double.
The argument for these inflated numbers is that financial planners have to budget for potential income because if they win grants or outside funding but haven’t included them in the budget, they can’t spend the money.
However, year after year these funds don’t come in and the budget appears to be twice what it actually gets. The city of Sedona’s budget is far more conservative in what it initially requests and what Sedona City Council finally approves. Camp Verde’s budget is off by a miniscule margin, the fiscal equivalent of a retail store cash register being over or under pocket change at the end of a work day.
Cottonwood does have the option of adding a line item of “Other Grant Funds,” currently at $500,000. It would make more sense for the city to add all those potential grants into this column as a line item, uncluttering the rest of the budget for realistic numbers. That way, the city would have say, $30 million of the “maybe” income it could spend, but a revised budget at or near the actual end-of-year total, and taxpayers could trust that budgets are actual reflections of what their city will spend over the next year.