The Payson Town Council on Tuesday adopted a budget that avoids threatened layoffs and boosts town spending significantly — mostly as a result of the start of construction of the $34 million Blue Ridge pipeline.
Town spending will most likely increase to about $14 million, a hefty a 60 percent jump from this year’s projected year-end total of $8.7 million. However, a $4 million increase in spending on the pipeline accounts for the vast majority of the projected increase. That money comes from federal grants and loans and saved-up impact fees.
So despite the seeming increase, town budget planners squeezed and scrimped. The police department, at the moment, remains about 10 positions below its pre-recession peak. That includes three positions lost to a hiring freeze imposed three years ago and seven vacancies the department has been having trouble filling.
Payson Mayor Kenny Evans observed, “It was another really tough year. Wouldn’t it be nice to just improve to the point where we had an average year instead of these miserable years we continue to have? Many, many hours were spent to create this budget and mitigate the public impact that would be there.”
The budget includes few of the hopeful embellishments in last year’s adopted budget, such as a big rise in sales tax receipts that never materialized and about $24 million in federal grants that remained as hard to snag as the Mogollon Monster.
So the 2011-12 budget featured a fantasy spending limit of $46 million, including $17 million for general fund operations and special funds like the water department.
But the elusive Bigfoot of an economic recovery shook the bushes without so much as a daylight sighting and projections shriveled. So instead of $17 million, the town wound up spending just $8.7 million in the general fund and various special funds.
The just-adopted budget features a $37 million spending limit and a $14 million budget for the general and special funds.
The council voted unanimously to adopt the spending limits, happy that town financial staff had sharpened their pencils sufficiently to come up with enough extra, projected revenue to avoid earlier, threatened layoffs of three town workers. A big chunk of that extra money came from charging various special funds’ higher overhead costs, plus projecting more money from the state for things like shared gas, sales and income taxes.
Finance director Hope Cribb warned the council that the proposed budget includes a bottom-line reserve fund of just $347,000, which she described as “razor thin.” In fact, she noted, it’s already closer to about $200,000 thanks to payouts of unused sick leave of $57,000 to two retiring police officers, a payout of $15,000 to a recreation department staff member who quit, $10,000 in water damage caused by a leaking pipe and other unanticipated costs. Moreover, the state Legislature recently overturned a provision that would have allowed the town to increase contributions from retirees for their health benefits — which cost Payson another $28,000.
“Is there any good news?” asked Councilor Fred Carpenter.
“That is the good news, compared to where we were,” said Cribb. The last time the council met, she had projected a $700,000 deficit rather than a $200,000 reserve.
“We didn’t have any layoffs,” interjected Town Manager Deborah Galbraith, “that’s the good news.”
Cribb noted that the town will probably also save $40,000 because it didn’t have to hold a runoff election for town council — since no one ran against the three incumbents. The town will probably also save a chunk of money as a result of what promises to be a long delay in filling seven vacancies on the police department.
“The police department probably won’t be able to fill those vacancies” in the near future, said Cribb.
“We have seven positions open,” said Galbraith. “And they had three other positions that we froze” several years ago.
“So they’re really down 10 positions as of right now,” said Carpenter.
“And still catching bad guys,” interjected Mayor Evans, reflecting a report from Chief Don Engler that the department this week arrested five suspects on related drug and robbery charges.
The council also extended a policy change that will not pay employees for accumulated sick time and personal leave time they haven’t used by December. Before the downturn, the town paid employees who accumulated unused days over a certain limit. Now, they continue to accumulate them until they quit or retire, accounting for the sizeable payouts for the two retiring police officers.
“So we’re going to have to pay the piper eventually,” lamented Carpenter. “Is that a six-figure number? Does anybody know?”
Galbraith replied “those hours change daily, so it’s hard to tell at any point in time.”
The council also decided on Tuesday to delay repayment of a $1 million loan from the town’s own water department to the general fund. The water department gets all its money from water bills and impact fees and had accumulated a reserve fund to pay for future major improvements — like increasing water main sizes to allow the installation of fire hydrants on the one-third to one-half of the town now lacking hydrants. The council shifted the $1 million to the general fund three years ago, but has since mostly just made $17,000 annual interest payments to the water department.
The budget will probably result in little change in the town’s property tax levy, which remains a minor source of revenue for a budget driven mostly by sales taxes. The town is already close to the maximum property tax allowed under state law. The budget projects an $11,000 increase in property tax receipts, mostly from new construction.
The detailed breakdown by department shows winners and losers, with some projecting increases, some decreases and some just holding their own.
The police department’s budget should rise about 10 percent to $4.4 million, well below its total three years ago.
The fire department budget will jump a projected 38 percent to $3.6 million, but that mostly comes from including a hoped-for federal grant to hire more firefighters to man the third fire station. State law requires the town to include in the budget any money it might possibly spend. The town can spend less money than the adopted spending plan, but can’t spend more — leading to the sometimes wildly inflated grand totals in the early spending plan. For instance, this year the town included a federal SAFER grant for more firefighters in its budget. The town failed to win the grant, but included a fresh application in the upcoming budget anyway. Ironically, a federal SAFER grant saved neighboring Hellsgate Fire Department this year from drastic budget cuts as a result of losing its contract with Payson to provide extra coverage for the area near the third fire station. Payson continues to run two-man crews on many shifts and rely more heavily on volunteers in order to stretch manpower to cover the third station.