Holbrook City Council begins review of $10.3 million budget

Before getting into the budget, Vice Mayor Wade Carlisle asked Sullivan if the city was actually down six percent on sales tax revenue, as noted in the budget documents.

“Yes, with the loss of Alco and some other businesses we are at $2.6 million, with a projection of $3.5 million,” Sullivan answered. “We won’t meet the $3.7 million projection that we budgeted for.”

He explained that as it stands, the budget includes no wage increases and reflects a reduction in force of three positions that will not be refilled, the recreation director, a grounds maintenance position at the golf course, and a position with the water department.

“It shows that the fire department utilities were up 25 percent. I don’t believe that,” said Carlisle.

City Manager Ray Alley nodded his head, saying, “A lot of it was the McLaws Road building. I found out that the thermostat had been turned up to 70 degrees all the time. It looks legit.”

Police Chief Mark Jackson also noted that a new air conditioning unit had been installed in one of the evidence rooms to replace one that wasn’t working.

Carlisle remained doubtful that those two issues would account for a $4,000 increase in utilities, so Alley said he would investigate the matter further and report his findings at the next meeting.

Alley went on to explain that the cost of airport fuel has lowered and a lot is being sold. “We make 20 cents per gallon and we’ve sold about 16,000 gallons,” he said.

Sullivan explained to the council that in past years the budget has included a transfer from the general fund into the Highway Users Revenue Fund of approximately $200,000 to account for any shortfalls that would impede road construction, but that this year he would not be doing so. “We’re pretty sure we can get most of the road projects done without the added money. We won’t be hiring any temporary workers this year, so that will help,” said Sullivan.

Regarding the state allocation of HURF funds, Alley said that the final numbers have yet to be received. “We don’t know yet if we will be getting more from the state. If we do, it’ll be around $30,000 or $40,000, I’d guess,” stated Alley.

Sullivan went on to discuss the status of the Arizona Water Infrastructure and Finance Authority (WIFA) loan used to build the wastewater treatment plant that was secured in 2000. “The WIFA expires on July 1, 2020, and then the one percent sales tax goes away. We collect $1 million on that, with $400,000 going to pay the debt and the rest going into the general fund. We lose $600,000 once that goes away,” he stated.

Sullivan explained that the city currently collects a total of three percent in sales tax, which would drop to two percent once the sunset clause on the bond goes into effect. “At first the amount collected barely paid the bond, but it’s grown. We could have paid it off early, but if we do, then one percent automatically goes away. That’s why we haven’t paid it,” he said.

He suggested the council put some thought into any big projects that would need to be addressed by the time that deadline nears in order to justify reasons to continue the tax if it goes before the voters, adding that the $600,000 loss would be a very big hit to the general fund.

There was some debate amongst council as to whether the citizens had voted in the original bond or if the council had passed it as an emergency bond. Alley said that he would review the matter and report back.

The council will continue its review of the budget in a work session scheduled following the next council meeting, which is scheduled at 6 p.m. on Tuesday, May 24.