HomeMy WebLinkAbout2011.0404.TCWSM.Minutesz:\council packets\2011\r5-5-11\110404wsm.docx Page 1 of 11
TOWN OF FOUNTAIN HILLS
MINUTES OF THE WORK STUDY SESSION OF THE
FOUNTAIN HILLS TOWN COUNCIL
APRIL 4, 2011
AGENDA ITEM #1 – CALL TO ORDER AND ROLL CALL
Mayor Schlum called the meeting to order at 5:03 p.m. in the Town Hall Council Chambers.
Present for roll call were the following members of the Fountain Hills Town Council: Mayor Schlum, Vice Mayor
Contino, Councilmember Leger, Councilmember Brown, Councilmember Hansen, Councilmember Elkie and
Councilmember Dickey. Town Manager Rick Davis, Assistant Town Attorney David Pennartz, and Town Clerk Bev
Bender were also present.
AGENDA ITEM #2 – PRESENTATIONS AND DISCUSSION RELATING TO FY 2011-12 BUDGET
ADJUSTMENTS NECESSARY DUE TO THE 2010 CENSUS POPULATION COUNTS.
Town Manager Rick Davis addressed the Council and stated that three weeks ago, staff structured a balanced budget for
the upcoming FY 2011-12. He added that they were delivered some census numbers that have a direct effect on a variety
of revenue sources, including State Shared monies, income tax, and license tax. He reported that the total impact to the
General Fund is in the neighborhood of about $915,000. He stated that staff had anticipated an impact and took some
steps to minimize it and the total impact is now $515,000. He advised that the impact to the Highway User Revenue Fund
(HURF), the streets fund, is about $100,000. He said that on the HURF side there are only expenditures because they
cannot raise revenue in that area so tonight staff will present a variety of solutions and lay everything out on the table that
staff has considered. He added that staff is looking for Council feedback and staff will make recommendations to the
Council based on three important principles that the Budget Committee has adopted. He noted that Ms. Ghetti will
explain what those principles are but they basically have to do with maintaining the organizational integrity , their ability
to deliver services, equity and also ensure that changes or solutions that come out of this meeting and are eventually
incorporated into the budget are sustainable. He said they view the solution they have as a permanent one for a variety of
reasons and chief among that is that they are not going to grow at a significant rate in the future and even if they do, there
are so many other communities growing at a much faster rate that the benefits of the Town's growth wi ll be minimized
somewhat by how much growth is occurring outside of Fountain Hills (there is only so much to go around so t he Town is
getting squeezed out a little bit). He said he welcomes the Council's feedback and interaction this evening. He stressed
that time is of the essence and this information could not have come at a more inconvenient time but staff is dealing with
it.
Deputy Town Manager/Finance Director Julie Ghetti addressed the Council and stated that they have been talking about
this day for a few years now, knowing that the Town's growth was not going to be as significant as the surrounding cities.
She added, however, that they did not expect the impact to happen quite so soon but they knew Fountain Hills could not
keep pace with the surrounding communities, such as Queen Creek, which grew by 61%, and others. She advised that as
the other cities and towns grow, their portion of the State Shared Revenue gets bigger and Fountain Hills' portion gets
smaller. She reiterated Mr. Davis' comment that the Town's share decreased by $900,000 and staff had projected about
$400,000 but they did not anticipate that the population would drop as much as it did.
Ms. Ghetti highlighted a PowerPoint presentation on the budget (Copy on file in the office of the Town Clerk) and noted
that $515,000 of the loss to the General Fund has to be made up from revenues, cuts in servic e or a combination of both.
She added that an additional $100,000 has to be cut from the HURF fund. She noted that this is "forever an economic
reality" and staff does not anticipate any change -- in fact, Ms. Ghetti said that she would expect that the next mid-decade
census or the decade census will show that the Town's portion of those funds, based on population, will decrease again.
She advised that as the economy picks up people don't move to Fountain Hills for flat, inexpensive land; they move here
for quality of life and more people are going to move to where it is cheaper to build and the population is growing. She
emphasized that any solution they consider must be sustainable over the long term.
Ms. Ghetti referred to charts showing State Shared Revenues and noted that they represent 41% of the General Fund. In
2008-09, the Town received $6.6 million and in 2011-12, they are going down to $4.5 million and staff does not see that
changing over the next three to four years particularly with income tax, which is based on two year's prior. The economy
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is just now coming around so they don't expect any increase in income tax over the next few years. She reported that $2.1
million will not likely return to the Town at any time.
Ms. Ghetti informed the Council that in January staff thought they had a balanced budget of $12.6 million but now in
March they have a budget gap of $513,000 with a $12.1 million General Fund. She said that they don't want to focus on
the $515,000 because really their deficit is $900,000 -- they had projected and cut the budget down as much as they could
(by $400,000) so the $515,000 that they are talking about or trying to solve, just really brings them to zero. She stated
that it won't bring any services or any of the projects that they keep delaying back -- it would just bring them to zero and
does not solve the Town's long-term structural problem as they will see later on. She advised that with HURF decreases
the only option is to cut costs; there are currently no revenue options for dedication monies to streets other than increasing
the Town's local sales tax.
Ms. Ghetti said that when they met with the Budget Committee to consider all of the budget options that are available they
wanted to make sure that they made smart decisions and ones aligned with the three principles outlined by Mr. Davis (be
permanent, preserve organizational integrity and be equitable).
Ms. Ghetti advised that the available tools to deal with this situation are in creasing revenues or decreasing expenditures.
She noted that the following options are submitted for the Council's consideration in order to increase revenues:
* Increase sales tax on telecommunications from 2.6% to 3.1% (estimated savings of $275,000 - does not require a
vote of the citizens).
* Increase sales tax on telecommunications to 3.6% (estimated savings of $550,000 - does not require a vote of the
citizens).
* Increase sales tax on telecommunications to 4.0% (estimated savings of $750,000 - does not require a vote of the
citizens).
* Increase the water franchise fee (5%) (estimated savings of $375,000 - does require a vote of the citizens - revenues
not available until 2013 if approved).
* Increase the primary property tax ($0.50 per $100 of assessed valuation. Estimated savings of $2,225,000 - does
require a vote of the citizens - not available until 2013 if approved).
Ms. Ghetti also presented the following options to decrease expenditures for Council consideration:
* Temporary staff pay cuts (10%). Estimated savings of $310,000. Not sustainable since staff has been reduced by
25% since 2009 and this does not really solve the problem
* Temporary staff furloughs. Estimated savings of $115,000. Not sustainable for same reasons listed above.
* Eliminate programs. Estimated savings of $120,000. Reduces organizational integrity.
* Reduce community contracts by another 20%. Estimated savings of $60,750. Reduces organizational integrity.
* Utilize the Rainy Day Fund. Estimated savings of $515,000. A temporary solution.
* Eliminate funding for Vehicle Replacement Fund. Estimated savings of $140,000. Not sustainable.
* Restructure debt payment for Community Center. Estimated savings of $193,500. Potential shortfall in MPC debt
service fund in FY 2014.
* Reduce contracts: Law Enforcement from 3.8 to 3.4 beats. Estimated savings of $215,500. Eliminates 2 Deputies,
one-third of a Detective, one-tenth of a lieutenant and 7% less of the Captain (the numbers represent a correction to
what was shown in the presentation).
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In response to a request from Councilmember Dickey relative to the option to restructure the debt payment and the
potential shortfall in FY 2014, Ms. Ghetti provided additional information to clarify this option.
Councilmember Leger asked what the reduction in law enforcement translates to in terms of full time employees.
Maricopa County Sheriff Captain Joe Rodriguez addressed the Council and reported that they would lose two people and
everything else represents small percentages of the others.
Ms. Ghetti continued her presentation and referred to a chart that depicted a compar ison of FY 20-11 General Operating
Costs per 1,000 citizens. She noted that Fountain Hills is the second lowest at $0.56. She also discussed Town salaries
from FY06-07 thru FY11-12 and said that they have declined 21% since 08-09. She added that the budget does not
contain any funding for salary or staffing increases. She further stated that the Town is down to 61 employees and said
that if the Town wants to go back to being one of the best places to live they need to have the ability to provide the
superior service that is part of their Mission Statement.
Ms. Ghetti discussed the first proposed solution submitted by staff, which includes:
* Increasing the sales tax on telecommunications to 3.1%, which would realize an estimated annual savings of
$275,000, which can be implemented by the Council.
* Restructuring the debt payment for the Community Center (-$193,500).
* Reducing the Law Enforcement contract (3.8 to 3.4 beats) - (-$215,500).
She advised that this would result in an estimated annual savings of $684,000.
Ms. Ghetti presented the second proposed solution as follows:
* Increasing the sales tax on telecommunications to 3.6%, which would realize an estimated annual savings of
+$550,000.
* Restructuring the debt payment for the Community Center (-$193,500).
She advised that this would result in an estimated annual savings of $743,500.
Ms. Ghetti also outlined the third proposed solution as follows:
* Increase sales tax on communications to 4.0%, which would realize an estimated annual savings of +$750,000.
* Restructuring the debt payment for the Community Center (-$193,500).
She advised that this would result in an estimated annual savings of $943,500.
Ms. Ghetti referred to a chart showing the cities and towns that have an additional telecom tax in place as well as a 25 -
year chart that showed estimated General Fund revenues and expenditures with no increases in revenues and one that
showed General Fund revenues and expenditures with an additional estimated telecommunication tax (no new revenue
and no increase in level of service). She also discussed a 25-year chart that depicted General Fund revenues and
expenditures excluding State land development (estimated - assumes no new revenues and no State Trust land
development as well as General Fund revenues and expenditures with an estimated additional telecommunications tax
(assumes new revenue, no development in State Trust land and no increase in level of service).
Ms. Ghetti indicated her willingness to respond to questions from the Council.
Mayor Schlum thanked Ms. Ghetti for her presentation.
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Mayor Schlum commented that they are not really into the budget season but they are talking about the census numbers
and the impact on the Town's revenue. He asked what the benefit is of talking about this separately from the actual
budget.
Ms. Ghetti replied that that is actually a budget item because all of these changes go into effect on July 1st and as of that
date the Town's revenues will be down as outlined above. She said that staff cannot move forward until they know what
the Council wants them to do because the budget is out of balance by the $515,000. She confirmed that staff needs more
direction before they get into the entire budget.
In response to a question from the Mayor, Ms. Ghetti advised that the 2010 Census has resulted in a revenue loss of
$900,000. She added that the League received the estimates from the Department of Revenue. She noted that some cities
and towns grew, but Fountain Hills' population decreased by 8% so they lost a proportionate share of the revenues. She
advised that some people didn't want to be counted in Town -- they wanted to be counted in their home districts -- and
perhaps when the 2005 random sampling census was done there were errors but whatever the case, the current number is
the one the Town will have to live with for the next ten years until another census is conducted.
Councilmember Dickey asked if Ms. Ghetti had a per-household cost for each of the proposed telecommunication
increases.
Ms. Ghetti said that she didn't but noted that the cost includes all of the utilities -- water, electricity, telecommunications
satellite, so it would just depend on what their bills were and provided an example.
In response to a question from Councilmember Dickey, Ms. Ghetti explained that if citizens look on their water, electric,
phone or satellite bills, there is a line item on there that says "Local Tax at a rate of 2.6%."
Ms. Ghetti explained that the telecommunications tax increase would impact electric, water, satellite, telephone, mobile
telephone (any communication equipment -- alarms, security alarms, etc.).
Councilmember Elkie asked how many citizens per officer currently exists compared to other cities and Ms. Ghetti replied
that she did not have time to do a comparison among other cities but reported that with 3.8 beats they currently have 30
officers, which is 1.2 per 1,000 residents. She added that if they go down to 3.4 beats, with the curre nt low population,
they would still be at 1.2.
In response to a request from Councilmember Elkie, Captain Rodriguez stated that if the proposed decrease went into
effect (3.8 beats down to 3.4) his recommendation would be to eliminate one of the deputies from the night time beats, the
slowest times (7:00 p.m. to 7:00 a.m.). He expressed the opinion that this would have the least impact on those beats. He
added that the other reductions are all fractional. He added that they are flexible and if they see that an adjustment needs
to be made they will make it. The Captain clarified other issues related to the proposed staffing adjustment and said that
two deputies would be eliminated and the other fraction would represent a third because they are going from 30 to 27 total
personnel but it would be two full and one fraction.
Mayor Schlum commented that there are 3.8 people on average each day and the Captain stated he has a problem with the
3.8 when talking about people but the way the shifts are set up right now, there are 4 full-time deputies on duty at any
given time (24 hours a day) plus a supervisor for a total of 5 bodies serving in a patrol function. Part of the equation is
vacation and sick time so they might drop down a little bit but that is the general staffing.
Discussion ensued relative to the fact that they increased the beats with the expectation of the State Trust Land coming on
board but that hasn't happened yet although the higher number has been maintained; areas that are served by Count y
deputies; the Captain's request that they staff the Rio Verde/Goldfield beat (a County beat that is not paid by the Town it
is just part of the County's taxes) because the area is currently under served and the Town would receive some benefit
from that staffing; the Mayor's comment that discussions have taken place in the past about increasing the level of
deputies in Town but because they are going through a budgetary challenge they have to look at everything and he hopes
that the Captain's team understands that -- the Town is very pleased with the level of service they provide; the fact that
police and fire are the last services that anyone wants to cut and the Captain's opinion that the Council will look at all of
their options but they are prepared to make whatever adjustments they have to; the Captain’s opinion that Level 1 calls,
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the most serious of them all, will not be impacted but there might be a slight impact on Level 3 calls (smaller issues like
vacation watches) and the fact that he believes there would be a minimal impact.
Councilmember Hansen asked when the beats were increased to take care of the Ellman Property and Ms. Ghetti
responded right after the annexation. Councilmember Hansen said it would be helpful to see a report, not too extens ive,
but a year-by-year report showing calls for service/crime levels before and after the increase. She stated that this would
help the Council make a decision as far as possible reductions in this area.
Captain Rodriguez advised that generally when economic times are tough there are more calls for service. He added that
he would not be surprised to see that despite the decline in population there was an upward trend in calls for service.
Councilmember Hansen noted that burglaries have increased and financial pressures on families sometimes result in
criminal activity.
Councilmember Leger asked if the anticipated decrease in responding to Level 3 crimes (if a reduction is made) could be
handled by the Posse and the Captain stated the Posse is not going to be able to provide law enforcement services. He
added that they can take some of the burden off and conduct pro -active patrols around the parks and be visible in Town
and help out with some of the vacation watches but because of their level of training there are some calls that they would
not be able to act on. It will depends on types of calls -- they cannot serve as a "cover all" but might be able to cover 50%
of the deficiency.
Mr. Davis, responding to a question from Councilmember Leger, advised that the Town's population, according to the
Census, had decreased 8%. He stated that an 8% decrease would bring them to about 3.4 beats, the same ratio.
Vice Mayor Contino asked Captain Rodriguez to provide a definition of a Posse member and what they can and cannot do
and how much authority they have.
Captain Rodriguez advised that he is not sure he can provide an exact definition but basically they are just trained more
than the average citizen would be in law enforcement practices. They do not have any State certifications or law
enforcement powers. They only derive power when they are under the direction of a Deputy Sheriff. Beyond fire arm s
training they receive about 50 to 100 hours of total training as opposed to the 400 to 500 hours that a Deputy or Officer
receives in the Academy.
Vice Mayor Contino asked for a definition of posse and stated that basically they need to actually be riding with a Deputy
to have any authority and the Captain advised that the Supervisor or Deputy can give them direction over the radio, which
has been done, and the Supervisors are used to working with the members of the Posse so they know what calls they can
and can't handle.
The Vice Mayor said that once they start going down this road, knowing that most crimes occur during the night time,
they might as well "dig a hole and pull the dirt in over themselves" because once they start cutting law enforcement they
are going to be in trouble.
Captain Rodriguez agreed that they are going to be giving something up but noted that based on the calls for service, night
time is the lower period for those calls. He added that as far as providing proactive law enforcement, they want people
out there at night patrolling the streets when everybody else is asleep. He reiterated that the least impact would probably
be during the night time hours.
Councilmember Elkie asked how long it would take to make shift differences (adding the two people) if the sta tistics
indicated that needed to be done and the Captain replied within a week or two if need be.
Additional discussion ensued relative to the fact that the Posse conducts routine patrols but do es not do traffic stops; the
fact that statistics prove that the presence of a black MSCO vehicle has a deterrent effect; Councilmember Dickey's
comments relative to Scottsdale's Community Policing program and the importance of doing as much as they can to keep
the community safe (the thinking is not the same as it always was); the fact that the time might be appropriate to talk
about Community Policing perhaps Thursday night when they hear another presentation on crime prevention);
Councilmember Elkie's comment that the Town is going to continue to see similar drastic impacts into the foreseeable
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future and his comment relative to the fact that he would like to hear from a couple of the Department Heads on what they
have been holding back on (even before hearing about the Census results); and Mr. Davis' statement tha t Paul Mood and
Mark Mayer could provide an overview of some of the projects or service levels that are not at the level they should be at
and provide a look at what is being done as far as the maintenance of public facilities (projects that are being pushed aside
but they are not going away, such as tennis courts and pumps for air conditioning).
Mr. Mood addressed the Council and stated that a lot of his discussion will focus on the Streets Department. He said that
they took a fairly large hit in the HURF fund (he had to cut about $360,000). They had $100,000 programmed for the
Pavement Management Program (to come out of the HURF fund) so that was cut and they added $100,000 from the CIP
fund back into that. He noted that Charlie Fleck has done a great job with the Town's open space (washes, dams,
landscaping in right-of-ways, etc), and said that Jeff Larsen, as the fleet has gotten smaller, has been cross training to take
over the open space maintenance and the right-of-ways and Raymond Rees has been training to do the dams and the wash
maintenance. He noted that Mr. Fleck's position will not be replaced after he retires. He added that they also had
anticipated some median work on Palisades that they took out of the budget and reduced the budget as f ar as asphalt, curb
and sidewalk repairs. He said that they also eliminated the vehicle replacement fund for the street sweepers, so whenever
the sweepers reach the point where they are not usable any more, they will have to look at contracting that out. He noted
that they have approximately $215,000 in HURF fund carryover and $63,000 of that had to be used just to get into balance
with what they are going to get from the State and HURF. He stated that next year he is going to have to use some
carryover or cut more. He added that when other utilities do projects where they cut the road, they also get an in lieu fee
from them so that can be used for maintenance in the future as well.
Mr. Mood discussed the Planning Department and advised that they had included the rezoning of the washes and the Shea
area's specific plan but those have been taken out of next year's budget. He reported that two years ago the funding for
wash maintenance was roughly $130,000 a year -- two years ago no wash maintenance was done and this year they only
did about $65,000 worth of work. When that was fully funded wash maintenance was a four -year cycle (one wash was
done every four years) and just skipping the one year and the reduced maintenance put them back into a seven or eight-
year cycle. He advised that Mr. Rees will give a presentation on that at the next Work Study Session. He noted that staff
came to Council for contingency funds for the pumps and the air handlers and said there are many more bad items, i.e. bad
doors at fire stations, 15 to 20-year old air conditioning units, gate work that needs to be done, etc. and facilities is putting
those things off as well.
Mayor Schlum thanked Mr. Mood for his overview.
Mark Mayer addressed the Council and said that the tennis courts used to be on a regular rotation at each of the park sites
and that had been pushed off for a couple of years and thankfully the Council voted to do that work this year but they are
not back on the regular rotation schedule. Two years ago they went to mowing Golden Eagle Park and Four Peaks Park as
a cost savings measure (they had a piece of equipment that had a relatively inexpensive mower that could be mounted on
it and staff came forward and said based on costs they thought they could mow and trim the two parks with existing staff
and eliminate those contacts, which they did. He said they could do more but the problem is they can't without adding
staff. They used to have a schedule for routinely painting the shelters at Golden Eagle Park but that has not been done for
a couple of years either. There are two parks that are essentially built out (Golden Eagle and Desert Vista) and two that
they are partially through but they originally had a three-year plan for improvements to Fountain Park and that has turned
into a much longer timeframe and many more phases. They still have a million and half to go to finish that park (lots of
little pieces from other phases) and they have over $1 million in potential improvements to Four Peaks Park (on the
eastern side). They also have the two school projects that they have been trying to do for the last couple of years and they
will likely be pushed back again as well. He noted that there are many more projects but these are the ones that come to
mind right now.
Councilmember Dickey referred to an item that was on a chart -- eliminate programs $120,000 -- and asked where that
comes from.
Mr. Mayer advised that one of the programs they looked at was potentially doing away with youth and teen programs.
They were cut back severely a number of years ago when they went through the last big budget cuts and never brought
back to the same level although the additional funds they got from the Council last year allowed them to do some of the
events they are doing this year but they will potentially disappear.
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Councilmember Leger stated that Councilmember Elkie made a good point -- that the new normal looks like the $915,000
and asked if they are seeing an uptick in sales tax revenue locally.
Ms. Ghetti noted that there has been a 3% increase that has been sustained over the last six months and that is a positive
thing. The local economy is showing signs of increasing and stabilizing.
Councilmember Leger said that they have to look at balancing the $915,000 off with the fact that the economy is starting
to show signs of recovering both locally and nationally but it is moving very slow. He asked if there are any other freight
trains coming down the track that they need to know about (any more hits that that they will possibly be taking from the
State in the next year or in the coming years).
Town Manager Rick Davis addressed the Council and advised that over the last several years there have been several
proposals to restructure the municipal tax code and restruct ure how municipalities receive State Shared Revenues. He
said there have been talks (more than talks) about LTAF and the elimination of those revenues and talks about vehicle
license revenue and on and on. He said many modifications have come up and will continue to come up about revenue
sharing arrangements and not in a positive way for the Town. He added that fortunately the Census only comes around
every ten years and they thought that the Town would remain on an even keel with the 2005 Census or slightly less but
certainly not 8%. Legislatively they don't know what will happen but structurally they show a deficit re -emerging again
in about 2017 even with the proposed changes that staff is bringing forward for their consideration. Long term, the
structural deficiency is still going to be there if things keep going along their normal course.
Councilmember Leger concurred that there are many unknowns and the State is having a difficult time doing what they
are doing and it is important to recognize that there could be other things, like impact fees, and in the Legislature there is a
significant amount of momentum in that regard. The Town has money set aside for recreational things, the Preserve, etc.,
to the tune of perhaps $1 million that are now on a shelf. There is a possibility that there are other things out there as well
that could adversely affect the Town.
Mr. Davis concurred and said they have no idea what kinds of things will emerge in the future that will have an impact on
the Town's budget.
Councilmember Leger noted that this year they are looking at an approximate $513,000 gap but in future years, that figure
will be closer to $915,000 without really know if there are other things coming down the line. He said that personally he
was an advocate of adding beats and it had nothing to do with State Trust Land although that was a good rationale for
doing it and added that quality of life begins with public safety.
Councilmember Dickey stated that there have been efforts by the Legislat ure to separate out the different taxes so if that
went through they would not even be able to look at the telecommunications options previously discussed. They would
have to look at raising all of their taxes. There have been efforts to eliminate munici palities' tools and that would hamper
their ability to raise funds in their own Town. She said that one of the things that they might look at someday is how they
are funded. She knows they look at Shared Revenues and that is a big word that they say all the time but it has a lot of
different parts to it and maybe someday they could have a Work Study Session on that and they could talk about what
some of the other cities and towns are thinking about this issue. She added that there might be a desire to lo ok at how
they can have more local control over the type of Town they want to be (or any city or town wants to be) without losing
the ability to make decisions for their community.
Additional discussion ensued relative to the Mayor's comments that they have been fortunate with their partners, Rural
Metro and the Sheriff's Office, but this year there will be an increase in the Sheriff's Office contract; employee costs will
continue to increase and inflation will continue as well; the fact that since 2009, State Shared Revenues have decreased
32% so the pie has gotten smaller and the Town's piece has gotten smaller and will keep getting smaller; declining
General Fund revenues and decreasing staff levels; the Mayor's statement that he is not sure that they ha ve hit bottom yet;
tough decisions the Council has made and the tremendous job that staff has done; the fact that they are being forced to
consider cuts to public safety and the fact that no one on the Council wants to move in that direction but everything has to
be considered; the Mayor's appreciation for the solution that the finance staff, the Directors and the Budget Committee
have brought forward for consideration; the importance of remaining focused and maintaining the quality of life that
exists in Fountain Hills; the estimated 25-year projected revenues for the Town prepared by staff and the fact that staff
projected out a moderate recovery and sales tax increase; staff is hoping that the Ellman Properties are developed;
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Councilmember Elkie's question as to whether they are looking for a long-term solution at this point or do they want to
"punt" this out to next year's budget (compensate for the shortfall this year or look for something long term);
Councilmember Elkie's question as to if the Council were to vote just to increase the telecommunications tax by perhaps
1/2% this year and next year and they find that they are still significantly short as far as the budget, what's involved
(associated difficulties) if the Council votes to raise it again and Ms. Ghetti's response that as a non-chartered town, the
Council can raise the tax whenever they want subject to notifying the public and the risk is alienating the citizens and
having them say if the Town was going to do it, why didn't they do it at the same time.
Councilmember Elkie said that he is hearing that they don't want to touch law enforcement and in his opinion
restructuring the debt payment for the Community Center makes sense. He said they have about $515,000 in the Rainy
Day Fund, which almost equates to the shortfall this year but being very cautious himself he always likes to have money
in the bank and with all the things they heard from Mr. Mood and Mr. Mayer, they might need those funds for
emergencies (air conditioners, gates, etc.). He asked what the telecommunications tax encompasses.
Ms. Ghetti reiterated that it covers utilities (electric, water, gas) as well as telecommunications (cell phones, satellite,
alarms, telephones, etc.).
Councilmember Hansen asked why there is a telecommunications tax on utilities and Ms. Ghetti explained that this is a
category defined by the Department of Revenue. Councilmember Hansen stated the opinion that they need to do a better
job defining what is covered under a telecommunications tax and clarifying what it is.
Councilmember Dickey said that if they were going to move forward she would suggest that they get examples of
everyone's bill like they did when they were going to do a property tax or a bond so it can relate to real life and people can
see that it is not something new but it could potentially be more. She added that she would tend to go for a long -term
solution because although she sees some upturn occurring she does not see it making up enough to help them. She added
that one of the things they talked about in "the good old days" was an actual raise for staff and she hates that that is now
out of the question and regrets that because it was about time. It has been many years since staff received an increase and
they are obviously doing more work with less people. She added that a lot of public safety workers have been getting a
lot of vilification recently (people are saying they are getting too many benefits) and she feels bad that at this time they
cannot help offset that. She cautioned that if they don't look a little bit long term, they have great staff in Town and as
things start to pick up Fountain Hills will not pick up as fast as the other larger cities and towns and they have to look at
the fact that there will be greener pastures, whether in the private sector or other cities and towns. She added that they are
glad that they are not looking at pay cuts or furloughs because she does not think those are long term solutions. She
further stated that if they are not trimming trees around intersections, not maintaining traffic lights or painting curbs, those
are also public safety items and she doesn't want to overlook that and a lot of what is done is for the good of the entire
community. She reiterated that she would prefer to look long term rather than for a one-year fix.
Councilmember Brown stated that if you take the eight towns and telecommunications tax and average them out it would
be 3.9 so if they very aggressively went to 4.0 they still would be behind the curve and still behind some of the
cities/towns. He agreed with Councilmembers Elkie and Dickey at the importance of looking at a long-term solution and
some fairly aggressive moves so they can stay ahead of the curve and start bringing back some of their services. He stated
that he too would not like to see any law enforcement cuts but said that at an 8% decrease that would take their full time
down to 27.6 so if they reverse all of that they now have increased their law enforcement's ability -- if they were at 100%
they are not at 107% so they are actually letting some of their services move forward and he thinks that is a good thing.
He reiterated that they are going to have to be aggressive in their thinking and findings and commended staff on the
proposals that they have brought forth for consideration. He said that he does not want to fall short of making an
aggressive move.
Councilmember Hansen asked if the mid-decade Census is an option that they can contribute to and can that increase their
piece of the pie if the Town's population increases.
Ms. Ghetti replied that she would suggest that if there is a mid-decade Census and it is optional, that the Town not
participate. She said she doesn't see any way that the Town is going to be able to increase its population in a bigger
percentage than the other cities and towns.
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Councilmember Hansen stated the opinion that they need to look at a trend here too -- the Census hit at the worst possible
time for them with foreclosures, etc., and people going to Maricopa and places that were more economical. She added
that if they look at their home sales now they are up this year compared to last year. She said she be lieves they are going
to see a different trend and it is a positive thing that housing sales are going up and they might be ticking up more in
population.
Ms. Ghetti commented that people move to Fountain Hills for the quality of life it offers -- the good infrastructure and
good schools, etc. - they don't move to Town because the homes are cheap. She stated that if they can maintain their
infrastructure and improve the quality of life, she thinks there is the potential that they could increase in populat ion. She
added, however, that if they can't afford to do any of those things, she doesn't see that happening because the other
communities will be more attractive to people.
Councilmember Hansen advised that she was not arguing against that; she is saying that they need to factor that in. She
said that despite all the doom and gloom they need to recognize that people may come to Fountain Hills because it is more
affordable plus it has a high quality of life and beauty that does not exist anywhere else in the Valley.
Mr. Davis stated that he echoes what Councilmember Hansen said as far as brighter days being ahead for the Town. He
added that there will also be brighter days for a lot of other communities and there will be growth and development. He
expressed the opinion that the State is a desirable place and will remain so. He discussed the comments by a well known
economist who said he expects that by 2014 Arizona will lead the nation again by economic growth. He noted that as
other cities and town’s proportionate shares get larger any increase the Town realizes is not going to mean as much as it
once did. He said that even if the Town doubled in size it will never keep up with cities such as Surprise.
Mayor Schlum agreed that brighter days are ahead and said that this is a tough time. He stated that they are looking at the
short-term Census and the impact that they have to face for this fiscal year. He added that this also reminds him of their
reliance on sales tax in Town and State Shared Revenues (being such a huge part of their overall General Fund operating
budget). He said that they will hopefully sometime look at their structure --not to generate more revenue but to have a
level revenue so they don't have to keep dropping levels of servi ce or things like law enforcement beats, etc. He stated
that that doesn't align with how Fountain Hills is and the level of service they want to have. He added that it is all about
getting a stable level of revenue. He asked what staff is looking for at this point in time -- some dialogue on the options
that have been presented?
Mr. Davis replied yes and said that he understands that there is a lot of concern about decreasing law enforcement levels
and more consideration is needed as far as the telecommunications options as well as the restructuring of debt service. He
asked for additional clarification so that staff can begin formulating a budget proposal.
Councilmember Dickey advised that as far as the other items that they look at every year when it comes to the budget they
would still be looking at making changes to those (is that not right?). She asked if it was out of the question to look at
lowering community service contracts. She noted that 20% is almost $61,000 and if they are not going to c onsider the
public safety changes would that be something that should be thrown into the mix -- either 10% or 20% or something like
that.
Mr. Davis responded that depending upon the direction staff receives from the Council they will have to run the numbe rs
to see ultimately what they look like. He added that they have some estimates but he would like to have another
discussion with the Council with regard to proposed levels of service that they can bring back on line. He said that he
doesn't know what those are and staff would be very interested in knowing also, given the direction given tonight, what
services the Council would like to see come back on line. He noted that staff has shared some of those tonight and at the
top is preservation of infrastructure and public investments (facilities) because once those are lost they are astronomically
expensive to recapture. He stated that they are also very interested in public safety and appreciates Councilmember
Dickey's comments with regard to the fact that that means more than just guns and hoses -- things like wash maintenance.
He said that those are the kinds of things that they would like to look at.
Councilmember Dickey advised that the Council was going to look at things that they look at every year and Mr. Davis
agreed and said they are always looking at being more efficient and effective and trying to determine where they can get
the biggest bang for the buck.
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In response to a question from Mayor Schlum, Ms. Ghetti advised that there are cities/towns not listed under the
telecommunications tax because their telecommunications tax is the same as their regular tax.
(Councilmember Brown left the dais at 6:35 p.m.)
Councilmember Hansen agreed with Councilmember Dickey's previous suggestion that they take some actual bills and
demonstrate what an increase would look and feel like and the Mayor concurred.
Councilmember Elkie discussed his water bill, which is about $35.00 a month, and provided a breakdown on what his tax
would be based on optional increases. He said that if staff had not anticipated the reduction in the State Shared Revenues
the number would be $915,000 rather than $515,000, which will be the reality next year. He stated that he does have
some concerns that if they raise the telecommunications tax this year by a certain percent that it won't cover what the next
budget shortfall will be and said he wants to look at a long-term solution and not just a temporary band aid.
Councilmember Leger commented that obviously they are not making decisions tonight and he is trying to figure out what
staff needs at this point in time. He said that it appears to him that there are no strong objection s to the
telecommunications tax although they have to provide examples. He added that he is sensing that it is a matter of what
level it would be -- a half of a percent or 1.4%. He stated that there is the short -term solution and the 1.4% which may be
a long-term solution and the 1% that is an intermediate solution. He advised that going for the long-term solution at 1.4%
makes some sense to him. He added that if they were in the moderate range, which he considers 1%, that would spare
them from having to cut public safety, which is something they could look at again in the future depending upon how
things go with the economy and crime levels. He stated the opinion that a 1% increase would be more palatable to the
citizens versus a 1.4%, although Councilmember Elkie illustrated that it is only a difference of twenty cents here and
thirty cents there. He asked if staff had enough information at this point.
Mr. Davis stated that staff has obtained a better idea as to what can be programmed into the budget for the Council's
consideration. He said that as a result of this discussion, staff will present something less than the 4% telecommunications
increase and Community Center debt restructure and see how that plays out in filling the gap, leaving the possi bility for
possible adjustments to public safety in the future.
Councilmember Hansen noted that the Council discussed the telecommunications tax last year in connection with the
community service contracts and at that time the feeling was "but it is still a tax." She said they didn't want to impose it
on the citizens because times are still tough. She stated that that kind of goes into the discussion too -- what rate do they
really want to put it at because bottom line is that it is still a tax.
Mr. Davis pointed out that one of the underlying principles this is all based on is equity and they want to make sure that
whatever they come up with is fair and that they do not lay the whole thing on just this or that (it should be a
combination).
Councilmember Dickey stated that it would be helpful if the Council knew how much of the $500,000 or so that was
already cut is a permanent fix or is it all just to get them through the year.
Mayor Schlum thanked staff for the presentation and Council for their valuable input.
AGENDA ITEM #3 – ADJOURNMENT.
Councilmember Hansen MOVED to adjourn the meeting and Councilmember Leger SECONDED the motion. The
Work Study Session adjourned at 6:43 p.m.
TOWN OF FOUNTAIN HILLS
By __________________________
Jay T. Schlum, Mayor
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ATTEST AND
PREPARED BY:
__________________________
Bevelyn J. Bender, Town Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Work Study Session held in
the Town Hall Council Chambers by the Town Council of Fountain Hills on the 4th day of April, 2011. I further certify
that the meeting was duly called and that a quorum was present.
DATED this 5th day of May, 2011.
_____________________________
Bevelyn J. Bender, Town Clerk