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Print City OK if state leaves it alone
Written by Trista Steers MacVittie   
Saturday, 19 September 2009 20:28

City sales tax and franchise fees are keeping Cottonwood’s head well above water as long the state doesn’t steal too much from its shared revenues.

If the state adopts a budget that raids any of the funds Cottonwood relies on — state shared income tax, state shared sales tax, motor vehicle licensing and Highway User Revenue Fund — the city will have to go back to the drawing board, Cot-tonwood Finance Dir-ector Rudy Rodriguez said.

For now, however, Cottonwood is sitting pretty as the only city or town in the Verde Valley to actually increase its budget from last year.

Cottonwood City Manager Doug Bartosh said the city is in a good position financially due to hard work by its former city manager, the late Brian Mickelsen, Rodriguez and Cottonwood City Council over the years.

The city saved during good times enabling it to support itself during bad.

According to the draft budget from the city, it anticipates an $88,155,445 budget for fiscal year 2009-10, up approximately 15 percent from the FY 2008-09 budget estimated at $76,540,960.

Rodriguez said if the Cottonwood City Council sets the cap at $88 million, it doesn’t mean the city will spend that amount of money. The city simply has to include any money it anticipates could potentially be spent because once the cap is set, spending cannot exceed it.

Money for projects scheduled for FY 2008-09 and not completed rolled over into the FY 2009-10 budget causing it bloat, Rodriguez said. Grant money to hire 12 new firefighters, and construction and staffing of the city’s recreation center, also account for the overall budget increase.

The general fund jumped to an estimated $5,012,225 for FY 2009-10 from $4,602,025 in FY 2008-09 and $3,629,490 in FY 2007-08.

Of the $5,012,225 allotted for next year, Rodriguez said $4.9 million will be reserves intended for emergencies only. Reserve amounts not spent in FY 2007-08 and FY 2008-09 are not reflected in the estimated budget for the general fund in that year if the reserve money was not spent, which also accounts for some of the increase.

City sales tax and franchise fees are where the city anticipates making up losses in other funds, according to Rodriguez.

The city’s main revenue source is local sales tax and the city actually predicts a decrease of 6.88 percent in collections for FY 2008-09 but anticipates it to rebound with a 12.23 percent increase in FY 2009-10, according to the draft budget.

Cottonwood raised its sales tax to 3 percent in November meaning the city didn’t see an entire year of taxes at the higher rate for this fiscal year. The draft budget predicts the city will bring in $9,407,040 this year and $10,557,132 next year with a tax rate of 3 percent for the entire year.
“Had we not done that [raised the sales tax] we would have been in pretty dire straits,” Bartosh said.

City staff also predicts increases in revenue for franchise fees for both this year and next fiscal year. Cottonwood taxes its residents’ Arizona Public Service, gas and cable bills, which will net around $231,990, an increase of 2.48 percent, for FY 2008-09 and $238,800, an increase of 2.94 percent, for FY 2009-10.

The city originally planned to hold a public budget hearing and adopt a tentative budget Tuesday, June 23, but pushed the meeting to Tuesday, July 7. Rodriguez said the meeting was delayed because council held five budget work sessions this year, rather than the customary two or three, and city staff didn’t have time to prepare the tentative budget by the June 23 meeting.

However, if Gov. Janet Brewer and the state Legislature agree on a plan that takes more money from municipalities than Rodriguez and his staff anticipated, it will mean more cuts.

Thus far, the city has implemented cost saving measures that include not adding any new programs, other than the recreation center, and suspending cost of living adjustments for all city employees.

The city’s merit program, which gives 1 to 5 percent raises based on an employee’s performance was, however, budgeted for.

“There could be additional cuts if the state Legislature takes any of our state shared revenue,” Rodriguez said.

Bartosh said the city would look at cutting the merit program, travel and training and minor capital projects before cutting positions.

The Legislature’s plan, which Brewer has said she won’t sign, would take shared motor vehicle licensing fees from municipalities.

Cottonwood receives 25 percent of the revenues from licensing of vehicles in Yavapai County, which Rodriguez said amounts to approximately $700,000.

The city did budget a bit of a buffer, which would absorb the blow, but the plan would cause the budget to be altered, according to Rodriguez.

“We are cautiously optimistic that this won’t happen,” Rodriguez said.

If Brewer and the Legislature can’t reach middle ground and Brewer shuts down the government, as she’s threatened, business will go on as usual in Cottonwood, Rodriguez said.

City Manager Doug Bartosh was not available for comment at press time.
Cottonwood Mayor Diane Joens was out of town.

Trista Steers can be reached at 282-7795, ext. 124, or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it