Once upon a time in a land of pine trees, there was a small town with a great big budget. But don’t get too excited: It’s mostly just a hopeful fiscal fairy tale.
Payson has now officially adopted a budget for 2010-11 with a fantastical spending ceiling of $83.6 million.
If the town actually spent all that theoretical money, it would work out to about $5,000 for every single resident.
However, that budget includes only about $26 million for operations and another $40 million in hoped-for state and federal grants — most of which the town probably won’t actually get, but which the town has to include in its spending ceiling.
Federal officials have said the town might get some $25 million for various street projects and a covered event center — but congressional reluctance to approve another deficit-bolstering round of stimulus projects has made those projects problematic.
Overall, the town will almost certainly spend more money than it takes in, mostly because Payson will start shelling out money for the Blue Ridge pipeline and other improvement districts that it has accumulated through impact fees and bond issues.
The 2010/11 budget adopted recently by the council shows a $15.6 million starting balance, mostly money banked for the Blue Ridge pipeline and collected for several street and water improvement districts. Once the smoke clears at the end of the fiscal year, that balance will decline to $8.1 million.
Figuring out any town’s budget represents a feat of fiscal sword juggling, likely to bewilder the spectators — thanks to the head-scratching proliferation of special funds — each with their own balances and revenues and bottom line.
For instance, the council voted to boost its primary property tax rate to the maximum allowed by state law, which will bring in an extra $70,000 or so.
However, homeowners will actually pay $3 to $3.50 less due to an even bigger decline in the secondary tax rate, which represents property tax increases approved by voters that have now expired.
For almost the first time in memory, the town’s assessed value actually dropped this year. In 2009-10, the assessed value stood at $240 million, which included $11.4 million in new construction. But for 2010-11, the town’s assessed value declined to $237 million, which included just $1.8 million in new construction.
Of course, the net decrease in Payson’s property tax bite doesn’t mean overall property tax bills will decline. The town of Payson’s levy accounts for 5 percent to 10 percent of the average resident’s property tax bill. Most of the property taxes go to Gila County or the Payson Unified School District, both of which raised their rate this year. Gila Community College accounts for another chunk, as do various improvement districts.
People living outside the town boundaries generally pay a much higher rate to their fire improvement districts than town residents do for the fire protection they get through the property tax levy imposed by Payson. That’s mostly because Payson relies on money from property taxes to subsidize services for residents.
All told, the town gets 47 percent of its tax revenue from local sales tax and another 10 percent from sales taxes collected statewide and redistributed based on population. A chunk of the income tax paid by residents also comes back to the town, which accounts for about 13 percent of town revenues.
Other significant sources of revenue include the vehicle license tax (8 percent), gas taxes (13 percent), the property tax (2 percent), bed taxes (2 percent) and a library tax (2 percent).
Reliance on sales taxes for so large a share of the town’s revenue proved difficult during the recession, when a plunge in sales forced layoffs, hiring freezes, furloughs and cancellation of most street and capital improvements in the past three years. A host of ambitious town plans to overhaul the event center and catch up on long-neglected street maintenance withered and died along with sales tax receipts.
The town’s general fund won’t grow much next year, although the budget does return town hall to five-day-a-week operations and eliminates the two-day-a-month unpaid furloughs for employees.
The budget also includes some upfront costs to fund buyouts to entice the early retirement of some longtime town workers. Those workers can generally get up to about five months salary as an inducement to accept a less generous package of retirement benefits for things like family medical insurance. The buyouts are expected to save the town a little bit in the current year, but an escalating amount in future years.
Most town departments will operate on only a little more money than they spent this year, not counting the impact of the furloughs, which lasted for about a quarter of the just-concluded fiscal year.
The police and fire departments will get the biggest boost from the repeal of the furloughs. Those mandatory unpaid days off compounded the effect of a tightening of overtime budgets, which the fire department in particular had been using to pay for most of its training activities.
The furloughs and shriveled overtime had prompted the fire department to put one less firefighter on each truck for most shifts and had prompted the police department to reduce the number of officers on duty by one or two for most shifts.
Despite the reduction in police patrols, the number of reported crimes fell in the past 12 months. That could reflect a real decline in crime, rebutting the assumption that some people turn to crime when times get hard. On the other hand, the reduced number of officers on patrol could have resulted in a decline in reports of crime, creating the illusion of a decline.