A slumping economy is sending the Payson Town Council into special session at 6 p.m. Thursday to consider putting a halt to expenditures from the council's contingency account.
Mayor Ray Schum requested the meeting to assess and possibly address the impact of the economic recession on the town's revenue sources.
Faced with a potential budget deficit of $1.1 billion, Arizona Governor Jane Hull is likely to reduce state revenues shared with counties, cities and towns by 4 percent.
"For Payson, this would mean a $100,353 cut in state shared revenues this and next fiscal year," Schum said.
The contingency account consists of $300,000 appropriated in the general fund for unforeseen needs. The town also maintains a nonappropriated general fund reserve equal to 9 percent of estimated revenue, which amounts to $970,550 for the current fiscal year.
In a letter to Hull, Schum suggested the burden of a 4-percent reduction in shared revenues would fall heavier on Payson and Gila County than on larger cities and counties. While sharing the cuts equally seems fair on the surface, "Payson cannot respond equally in absorbing such a loss," Schum wrote.
"Only one-half of 1 percent of the land in northern Gila County is privately owned," Schum told the governor. "Therefore we cannot offset one loss by taxing another in this case, an increase in property taxes."
Pointing out that bigger communities have a larger corporate tax base, Schum emphasized that 71 percent of the town's general revenue fund is derived from local sales tax and state shared revenue.
"It would appear that larger cities and counties, along with reductions in some capital improvements, would be a more likely source of making up the budget deficit we all face," the mayor said.
Following this item on the agenda, the council will adjourn into executive session to discuss negotiations with the Tonto Apaches regarding water issues and reservation development with and adjacent to the town. The reservation is the town's largest water customer.