HomeMy WebLinkAbout2011.0523.TCSM.Minutesz:\council packets\2011\r6-16-11\110523m.docx Page 1 of 15
TOWN OF FOUNTAIN HILLS
MINUTES OF THE SPECIAL BUDGET SESSION OF THE
FOUNTAIN HILLS TOWN COUNCIL
MAY 23, 2011
* CALL TO ORDER AND ROLL CALL
Mayor Schlum called the meeting to order at 5:35 p.m. in the Town Hall Council Chambers.
* ROLL CALL
Present for roll call were the following members of the Town Council: Mayor Schlum, Vice Mayor
Contino, Councilmember Brown, Councilmember Leger, Councilmember Elkie, Councilmember
Hansen and Councilmember Dickey. Town Manager Rick Davis, Town Attorney Andrew McGuire
and Acting Town Clerk Shaunna Williams were also present.
AGENDA ITEM #1 – CONSIDERATION OF RESOLUTION 2011-19, ADOPTING THE MAXIMUM
AMOUNT FOR THE TOWN OF FOUNTAIN HILLS' FISCAL YEAR 2011/12 TENTATIVE BUDGET
WITH APPROPRIATE DIRECTION TO PUBLISH SAID DOCUMENTS IN ACCORDANCE WITH
STATE LAW. THE COUNCIL MAY ADDRESS ANY OR ALL ITEMS CONTAINED IN THE
BUDGET DOCUMENT AND INITIATE ANY CHANGES PRIOR TO THE ADOPTION.
Mayor Schlum welcomed everyone to the meeting and explained the process that would be followed. He noted
that this is the first of two Special Budget Sessions that will be held (the second will be held on Wednesday,
May 25th at 5:30 p.m.) and encouraged citizen attendance and input.
Town Manager Rick Davis addressed the Council and thanked the members of the Executive Budget Committee
and staff for all of their efforts in putting together the proposed budget. He said that based on the feedback that
has been received and some of the ideas that the Council has shared staff has put together some new ideas they
want to bring forward relative to closing the budget gap that currently exists, which resulted from the Census
numbers. He added that staff will also discuss the fee schedule this evening and hopefully by the Wednesday
meeting they will be a lot closer to bringing the budget process to a close. He stated that while staff may have
some other ideas and options for the Council to consider, the proposal that came forward initially is the one that
staff believes addresses the budget (the structural or revenue problem) more comprehensively and longer term.
He said that what will be presented this evening will provide additional time, which hopefully will allow time
for the economy to improve.
Deputy Town Manager/Finance Director Julie Ghetti addressed the Council and highlighted a PowerPoint
presentation on this issue (a complete copy is available in the office of the Town Clerk). Ms. Ghetti commented
on FY 2011-12 budget concerns and issues; proposed General Fund operating expenditures; Streets (HURF)
operating budget; proposed budget solutions, which must be aligned with the following three principles: (1) Be
permanent and sustainable (there are likely to be more declines in the future due to legislative action, increased
population in other communities). The Town has to adjust to the new fiscal reality; (2) Preserve organizational
integrity (the ability to perpetually provide the high level of service that the citizens have come to expect); and
(3) Be equitable (does not rely on one source or citizens' group; spreads the burden among various publics);
revenue options that are being considered (proposed increase in sales tax on telecommunications. A 4 .0% sales
tax, which would generate $750,000, is currently included in the proposed budget); historical Town staff levels
and continuing declines in that area; a comparison of FY 2010-11 General Fund operating cost per 1,000
citizens; alternative options based on Council feedback and further discussion by the Executive Budget
Committee which consists of paying down bonds (pay off all bonds that were sold in 2004 to build Town Hall).
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Annual bond payments are paid through local sales tax (0.1%). The payoff a mount is $2,932,697, the savings
over the life of the bonds is $276,000 and the annual bond payment that would be eliminated is $350,000.
Ms. Ghetti briefly highlighted the previous presentation provided by staff relative to the budget, the
recommended steps to be taken and pros/cons/impacts of the various proposals.
Ms. Ghetti stated that today's steps include:
* Authorizing staff to prepare necessary paperwork to refund MPC bonds;
* Authorizing a resolution to notify the public regarding the increase in telecommunications tax;
* Approving the Fee Schedule;
* Approving the Pay Plan (no increases);
* Adopting the tentative (maximum) budget;
* June 16th adopt the final operating and capital budgets; and
* August 4th adopt the tax levy.
Ms. Ghetti indicated her willingness to respond to any questions from the Council and added that all of the
Department Directors are present as well.
In response to a question from the Mayor, Ms. Ghetti advised that if they were to pay off the bonds they would
be adding $2.9 million to $36.2 million for a total of $39.1 million (for the tentative maximum budget).
Mayor Schlum thanked Mr. Davis and Ms. Ghetti for their comments.
Executive Assistant Shaunna Williams informed the Mayor that there were six citizens who wished to speak on
this agenda item.
Frank Ferrara, CEO of the Chamber of Commerce, addressed the Council and discussed tourism. He said on
March 23rd, the Chamber sent a very detailed proposal to the Executive Budget Committee and several of the
Councilmembers and never received a response. He stated that he would like to know the status (get some
indication from the Council on the proposal). He assumed that the Committee would forward it on to the entire
Council for their consideration. He further commented on the restaurants and the bars (35 of them in Town)
with liquor licenses and advised that he recently became aware of a tax that was incorrectly passed because it
was not discussed thoroughly and there was no interpretation of what the tax was going to be. Some thought it
was a one time, new business application fee for a liquor license with nothing about a renewable license and
when it came out it was not only for initial applications, it was also for existing businesses (renewables) and
quite high. Several businesses have indicated to him that if the fee is due and payable for this year, not next
year, they won't be here next year because they will be out of business. He requested that they consider what the
Council did and ask themselves if they were aware of the consequences that action would have on those
businesses. He stressed that they are not out of the recession; over the last three years it has gotten worse. He
asked the Council to please consider these liquor licenses in the interest of he lping those businesses because
some of them will not survive if the fee is held up.
Linda Bardow addressed the Council and said she heard someone say that the capital projects have to do with
road bonds and she just doesn't understand why they went from $6.4 to million to $17 million. She also noticed
that what wasn't in the budget for last year was miscellaneous grants for $1.5 million and questioned who those
monies were going to. She added that the recession is getting worse and she objects to anything that adds
money to anything right now including replacement of some of the Town's older cars (look at that when times
are better). She said that she opposes raising the money for the Council because this is not something they need
to do and she does not understand why the administrative costs are going up by $400,000 at the Municipal
Court. She noted that the Court Enhancement Fund increased from $12,500 to $33,000. She advised that staff
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estimated that local sales tax revenues were going to go up and disagreed with that statement. She asked why
they estimated the revenue from the building permit fee increasing and is that because of the new development
they talked about previously? She referred to her Chaparral water bill and said that she and her husband do not
use a lot of water and their bill was $26.47 and her water usage was $6.35 (the rest are fees and all kinds of other
things). She stated the opinion that the numbers provided for what citizens a re paying for certain services are
under estimated and spoke in strong opposition to raising taxes, particularly during these difficult financial
times.
Councilmember Elkie requested that they answer questions as they come up and the Mayor concurred.
Mayor Schlum requested that staff provided an update on the status on the Chamber's tourism proposal.
Ms. Ghetti advised that the proposal has been received and the Budget Committee will be reviewing it but what
they needed to do first before they could go there was figure out how much money they were going to have in
the budget and whether there were going to be additional cuts. It all depends on what they do as far as closing
the budget gap. The Budget Committee intends to continue to meet and once they have a number and know
where they are at then they can move forward with the contracts and figure out what they are going to do with
them.
Mayor Schlum directed staff to make copies of that proposal available to all of the Councilmembers and asked
for copies of the Comprehensive Fee Schedule for all of the members as well. He said that they are going to be
talking about the restaurant/bar fees and others as they move along tonight. He noted that Mr. Ferrara asked that
the Council look into that and where the Town expected it would be now two years ago when they adopted that.
He agreed that the economy is still tough and that is why the Town continues to reduce its spending. He asked
Ms. Ghetti to respond to Ms. Bardow's comment about the increase in road bonds.
Ms. Ghetti explained that there is an increase in that area and said that if the proposed initiative is successful and
the voters approve the $9 million bonds for the roads, they have to budget for it and include it as an expenditure.
If the proposal is not approved, they won't be making that expenditure but they have to include it in the budget
in the event that it is. It is for the Saguaro Boulevard project. Ms. Ghetti also discussed grants and said that they
are not giving grants -- every year staff includes in the budget a miscellaneous line item for grant revenue in the
event that a grant comes in during the year that they are not aware of. The only way the Town can spend it is if
they budget for it so if they didn't do that and they got a grant they would not be able to spend it; they would
have to wait until the following year.
In response to a request from Councilmember Dickey, Ms. Ghetti explained why the Council is adopting a
maximum amount.
Mayor Schlum commented that he was not aware of the fact that the Council was getting a raise and asked Ms.
Ghetti to speak to that.
Ms. Ghetti advised that the budget does not contain raises for anyone. The difference referred to by Ms. Bardow
is probably the reallocation of staff that are dedicated to the Council. Because they have gone to a program
budget, every cost associated with a program or department is now included in that budget.
Mayor Schlum asked about increases in administration in the Judge's area and Ms. Ghetti stated that the one
mentioned by Ms. Bardow is a separate fund that the Court uses to purchase items to enhance the Court, the
Court Enhancement Fund, and that does not affect the General Fund; it is for anything purchased such as
computers, etc. She added that if the budget went up it was likely a re-allocation of staffing; there are no
increases at all for any Court staff.
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Ms. Ghetti also addressed the Vehicle Replacement Fund and noted that that is actually a transfer from the
General Fund and Streets Fund (annual depreciation for vehicles) and it comes out of the General Fund and goes
over to the Vehicle Replacement Fund. That consists of monies set aside for when vehicles need to be replaced.
They have not replaced any vehicles at all this year although four were scheduled for replacement (they may
replace one before the end of the year).
Ms. Ghetti discussed sales tax revenues and said that they have seen a sustained increased in sales tax over the
past five months of at least 3% and that is why staff anticipates that they will end this year with a surplus. Staff
had anticipated a 3% overall increase in local sales tax for next year. She concurred that the overall revenue is
still going down because of State Shared Revenues (budget was reduced by $900,000).
Discussion ensued relative to the Census and the fact that the Town's "piece of the pie" has decreased; the
possibility of the Town doing a mid-year Census in five years and the fact that staff does not anticipate that
Fountain Hills will grow at a faster rate than Surprise, Chandler or Queen Creek and so they are likely to lose
even more in this area; staff has projected six building permits this year and not much more than six next year
(no commercial), a huge decrease; Plan Review fees and why is there a proposed increase in that area if building
permits have decreased and Ms. Ghetti's comment that it could be from the fee schedule and other types of
permits that are expected to come in; Director of Development Services Paul Mood's explanation that there are a
lot of tenant home improvements and remodels that get factored in as well; last month they issued more permits
than they have during the last few years, 50 to 60 general permits; staff anticipates some single family home
permits coming up in the future; Ms. Bardow's comment about her water bill and Ms. Ghetti's explanation that
staff took an average of what peoples’ bills are (if someone has a $50.00 water bill, they are currently paying
$1.32 to Fountain Hills and that increase would go up $0.71 to $2.03) if they go up to the 4% (Town currently
receives 2.6% of the bill); Ms. Bardow's actual bill and the fact that the Town's portion of Ms. Bardow's bill is
$0.60; legal requirements associated with adopting a tentative maximum budget and the fact that if antici pated
revenue and/or grants are not received, they cannot spend the monies so the budget may actually be a lot
smaller; the fact that all municipalities are required to follow the State's budget laws; the fact that the tentative
budget does not have to be adopted tonight, there is still some "wiggle room;" Councilmember Leger's
suggestion that since citizens have raised questions about salary increases being included in the budget, it might
be appropriate to put in a footnote or comment explaining/clarifying that this is not the case and Councilmember
Hansen and the Mayor's concurrence with this recommendation; the fact that no part -time staff are going full
time; there are 59 FTE's for Fiscal Year 2011-12, (61 total compared to 81 the previous year); Ms. Ghetti's
intention to clarify why the numbers are different and the reason behind those changes in the actual budget;
monies that are projected to be spent on road projects (next year, if the bond passes, staff is projecting $17
million for the Saguaro project and approximately $2.6 million for pavement maintenance and of that $1.5
million would be from bond funds and there are also the Shea and Saguaro projects (widening project) and that
is projected to cost about $3 million with about $2.2 coming from Proposition 400 money; staff's estimate that
next year approximately $3.1 million will be spent on capital projects with $1.3 million coming from Annual
Pavement Management (out of the CIP Fund) and approximately $800,000 of the Town's portion of the Shea
widening project (those two projects make up about two-thirds of that).
The Mayor thanked staff for their clarifications and input and said that they will no w hear from the rest of the
citizens who wish to speak on this item.
Ken Couture, a member of the American Legion Post #58, addressed the Council and said that his organization
is a small, non-profit and the purpose of their existence is through monetary donations and volunteerism, to
support a variety of Veteran's groups and a number of initiatives throughout the community. He provided
examples of the work that they carry out. He said that a number of members are present this evening to express
their opposition to the newly implemented liquor license initiative. He stated that they pay $200 to the S tate of
Arizona for a liquor license so at $500, the Town is imposing a fee on private, non -profit clubs and
organizations within the community that is two and a half times more severe than the State. He discussed the
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current harsh economic times and advised that Post #58 and other organizations in Town that are being
subjected to this can't afford to pay the fee but they also can't afford not to. He encouraged the Council to
reconsider this matter.
Mayor Schlum said that the Council will definitely be talking about this.
Mr. John Rodakis addressed the Council, and said he does not understand why Fountain Hills would charge
more than the State of Arizona. He stated that he understands that this was passed two years ago and it seems
odd that the Chamber, which watches over all businesses, wasn't aware of it nor were a couple of
Councilmembers. He asked why just liquor licenses are affected and not all businesses at a certain level. He
noted that the cost will have to be passed on to residents of the Town and expressed the opinion that it should be
lowered or other businesses should be included. He stressed the importance of coming up with a level fee.
Sam Coffee, with the American Legion, addressed the Council and said they recently received a renewal for a
liquor license and does not know how they could receive a renewal for something they never had. He stated that
he could not find any information about the liquor license on the Town's website and if the fees were approved
over a year ago he cannot understand why the information was not placed on that site. He asked if the Council's
agenda adequately described the issue that they voted on because if the answer is yes, why was n’t anybody at
the meeting to protest against this when the Council approved it. He added that some people told him that they
received letters about this but the American Legion did not receive one or if they did, he didn't see it nor did any
of their finance people. He commented on problems associated with taxing one particular type of business and
stressed that AMVETS and the American Legion are primarily charitable organizations and noted that their bar
does not make any money; they actually lose some money. If it wasn't for their special fund raising activities
they could not operate. He said that in order to pay the tax they will have to eliminate some program and
discussed the very worthwhile work that they perform. He added that a lot of Veterans will not be happy if this
stays in place.
Charles Lewis, American Legion Post #58, addressed the Council and said he is present this evening on behalf
of his fellow officers and others, almost 700 in number. He reiterated a lot of the comments expressed by the
other American Legion speakers and noted that their lounge merely provides them a platform upon which to
stage fundraisers and appeal to the community to fund their very worthwhile charities. He noted that in years
past the organization has participated with the Town's Parks & Recreation Department in painting trash cans and
passing out flags at the Stroll & Glow. He acknowledged that revenue is down and everyone is hurting but
stated that the tax on all of the non-profit organizations is a killer. He appealed to the Council to reconsider only
taxing liquor establishments.
Linda Kavanagh addressed the Council, referred to bar charts included in the budget presentation and noted that
one says that in 2010-2011, the General Fund operating budget was $12.6 million and now it has gone down for
2011-12 to $12.1 million, however, the Town's website states that for 2011-12 the estimated revenues on the
General Fund line are $13.1 and asked for clarification on that discrepancy. She added that the material also
states that there are some transfers out of 337 and 354 and resources available are $12,787,409 and expenditures
$12,936,830 for a difference of $149,421 as the general shortfall. She stated that she only has what has been put
on line and can't find where the rest of the shortfall is because the other two columns seem to show that the
Town's resources are larger than what the expenses are going to be. She thinks they are talking about $700,000
and something in shortfall and she would like to know where the rest of it is. She also pointed out another chart
that talks about the General Fund operating costs per 1,000 citizens that staff compared to other towns and asked
if the chart actually is comparing apples to apples. She noted that Scottsdale has its own Fire Department,
Police Department, Water Department, etc., and stated that this should be an exact comparison in order to be
accurate and she can't find anything that provides an explanation relative to what was actually compared. She
added that as far as the charts that show the bills, she doesn't know anyone who has a $30 Cox bill (she pays
$180.00) and in the summer for SRP she pays $260 and $300 with her air conditioning going and they have two
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cell phones, each at about $100.00. She noted that going with the 4% increase in telecommunications means a
53% increase, which during these difficult economic times is a little bit too much for most people to be able to
handle. She added that any tax right now would be difficult. She informed the Council that she is also a
member of the American Legion Auxiliary and her husband is a member of the American Legion Post #58 and
the AMVETS and stated that she supports their protest against the liquor license tax. She advised that the State
charges $175.00 for a liquor license and some of the businesses have gotten up to $1,000 and she would like to
know how the Town can justify $1,000.
Mayor Schlum thanked all of the speakers for their comments and said that they will be discussing the liquor
license issue this evening.
Councilmember Hansen said she would like to discuss how this happened. She noted that they have 19 pages of
permit fees and a few years ago they started to be included in the budget documents so they were approved with
the budget. It was always her understanding, and they had talked about it for years, that they were going to
implement a new license fee but it was her understanding that that was a one-time license fee and not an annual
renewal. She stated that that is how they got to where they are at.
Mayor Schlum advised that Councilmember Hansen's memory regarding that is similar to his.
Councilmember Hansen added that as she was reading the budget, on Page 43 there is a sentence that reads,
"Fees and charges should be based on benefits and/or privileges granted by the Town or based on cost of a
particular service." She said that this particular fee doesn't really provide a benefit and the Town doesn't provide
any particular service. They have involvement when there is a new license or a license change but the Town is
not involved as far as renewals. She stated the opinion that the Town lacks justification for an annual fee
because the State is the issuing agency.
Mayor Schlum requested that Ms. Ghetti provide background on the fee and the Town's role/responsibility as far
as licensing.
Ms. Ghetti advised that the Town has talked about liquor license annual fees for a long time and what other
cities and towns do. She said that the theory behind the annual fee is that establishments that have liquor
primarily require a higher level of public safety (enforcement and calls for service). As far as the language that
says fees should be based upon the service provided it would be great if the Town did that as far as all the fees
that are charged but there are a lot of things that they don't charge anybody for and fees that they subsidize
heavily. She reiterated that the theory behind this is that liquor establishment require more public safety
services and noted that not all liquor licensed establishments fall into that category. For a long time Fountain
Hills has not had a fee at all and a majority of cities and towns in the state do have an annual fee.
Mayor Schlum asked if other cities and towns have a recurring cost as well and Ms. Ghetti replied yes, a
majority of the municipalities have both an application fee and an annual fee. She confirmed that the
application fee is $25.00 and the annual fee is paid initially up front and then continues on on an annual basis.
The Mayor asked if American Legion Post #58 would fall under a private club license category (Series 14) and
Ms. Ghetti responded that it would.
Mayor Schlum stated that at $500 he thinks they may be the highest across the board on this fee so that is
something to consider.
Councilmember Dickey asked if there was any differentiation between non-profit clubs or service clubs
(between a golf club and a Veteran group per se) and Ms. Ghetti stated that the series numbers are all issued by
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the State Liquor Board; those are the only categories they have and all the cities and towns base their fees on
that series.
Discussion ensued relative to the fact that the Town charges fees for things other than liquor; Mr. Couture's
appreciation to the Council for recently granting his organization a Bingo permit to help with some financial
woes and his comment that as a private club they are allowed ten days per year to be open to the public and for
that privilege they pay a $25.00 to the Town (an additional $250.000 that the private clubs pay to be open to the
public plus the permitting fee); the fact that staff had presented some PowerPoint presentations that mentioned
that they were recommending the implementation of a new liquor license fee but because it was built into and
discussed as part of the budget, staff did not do a specific presentation on every fee - staff was hoping to do that
this evening; the fact that the fee schedule has been in effect for several years and included in the budget ever y
year; the highlighted fees in the Council's packets are the ones that staff are recommending be changed; the
Mayor's recollection of the discussion on the fee and his opinion that they were remiss in not talking about it
more because he was not expecting the recurring fees; the Mayor's opinion that there is an opportunity to discuss
a higher initial fee (application fee) because of all the work involved and a decreased annual fee; unique factors
associated with non-profits that the Council may want to consider; the fact that a comprehensive list of the fee
schedule is on the Town's website and the Mayor's suggestion that staff make that more accessible on the site;
Ms. Ghetti's comment that there is no charge for a Special Event Temporary License; the fact that the $25.00 per
day that he referred to above is charged by the Liquor Commission and the group turns in an application to the
Town for a Special Event and he was told the last time he turned in an application that the Town charges $10 for
an application for a Special Event License, no matter how many days they are asking it for; the work that has to
be done by staff when a liquor license application is received and the fact that the work is more labor intensive
up front; the fact that staff has copies of the letters sent to the 39 holders of licenses and the letter did indicate
that effective January 1, 2011 there would be a liquor license fee charged annually and it would be included in
with their business license fee.
Mayor Schlum noted that the discussion on this item will also take place at the Wednesday, May 25th meeting.
He said that since there are no more speakers, they could do a motion or continue the dialogue and then do a
motion. He pointed out that Goodyear charges $364 a year for everyb ody and some charge the same price for
all and others vary the charges. He discussed the various fees listed on the schedule provided by staff. He
stated that of the 39 businesses impacted he would guess that about half fall in the restaurant category and there
are some hotel/motel beer and wine licenses as well. He added that they also have the Series 6 licenses issued to
bars that serve hard liquor, which might demand a higher fee because there is a greater chance that more calls
for service may be required at those establishments.
Councilmember Elkie asked when a bar owners renews a liquor license with the State Liquor Department
whether it has to be renewed each year and whether something has to be submitted to the Town if the ownership
changes.
Ms. Ghetti replied no.
Councilmember Elkie advised that he would be in favor of a one-time application fee -- something across the
board for businesses (for all liquor licenses). He added that as Councilmember Hansen stated, there would be no
additional annual fee. He said that he thinks it is important that whatever they do they should make it
retroactive if that is possible (at least back to last year or the year before). He stated perhaps a one -time $500
across the board application fee and then zero from then on unless the license changes hands.
Ms. Ghetti noted that if they collected the proposed fee from every business it would be about $44,000.
Councilmember Brown pointed out that Queen Creek charges a one -time fee of $1,500 and no annual fees and
they are the only municipality that charges a one-time fee. He expressed the opinion that $500 is not adequate
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for businesses that open up and hopefully run for many, many years in Town. He suggested they charge a $750
one-time fee to support associated work year after year.
The Mayor noted that Mesa charges the highest amount, $2,000, and also charges an annual fee of $500 to $550.
He added that it appears that Series 6 license holders are charged more than club owners.
In response to a question from Councilmember Dickey, Ms. Ghetti advised that this project started several years
ago and the Town's fees were based on what other cities and towns were charging for their annual fees; they
were not tied directly to a business or number of service calls. She added that she is not sure that any city or
town does it that way.
Mayor Schlum advised that some cities and towns charge based on the businesses' square footage.
Vice Mayor Contino stated that he supports Councilmember Elkie's proposal for the one -time up-front fee and
commented on the difficulties associated with keeping businesses running especially in a small community. He
added that with the economy the way it is, a lot of the businesses are operating on a shoe string budget now.
Councilmember Hansen also indicated support for the one-time fee (no renewal fees) but said that right now,
starting it up, she would be in favor of $250.00. She noted that the fees get re -evaluated every year so changes
could be made but at this time she believes $250.00 would be sufficient.
Mayor Schlum agreed that it is a balancing act and said he is hearing that the Council wants to be equitable as
far as recapturing the costs, particularly on the front end, and keeping it the same for everyone.
Ms. Ghetti said that there is a $25 up front application fee for Special Event Licenses but no renewal fee.
The Mayor stressed the importance of encouraging special events and not charging applicants $500 for a liquor
license.
In response to a request from Mayor Schlum for input, Ms. Ghetti stated that in her opinion the process is labor
intensive because there are a lot of staff members involved. She added that if the Council is not going to charge
an annual fee, she would suggest that they try to recover some of the costs associated with the increased calls for
service, etc., and that would be closer to the $500 application fee, with an exception for the Special Event
Licenses (they would pay the $25.00 or zero if that is what the Council desires).
Ms. Ghetti advised that it is possible to make it retroactive for the current budget year and staff would have to
issue refunds (they have collected approximately $13,000 to date). She said they would have to refund all of
that money.
Councilmember Dickey requested that the Council obtain more information before they move forward with one
thing or another. She stated the opinion that both $13,000 and $44,000 have been mentioned and those figures
are big enough that they should not just be brushed off right now. She added t hat she would rather have a better
feel for this (keep bars on but take clubs off, etc.). She said she would rather find out now what the
ramifications are as far as what they do. She stated that she would appreciate discussing this further on
Wednesday and that more information should be provided.
Mayor Schlum said that would be fine and they could always come back to this. He added that he would like to
put a little bit of a line in the sand if they could in relation to this so they can give staff a better idea of where
they are headed (perhaps that they are between $250 and $500 for a one-time up front application fee). He said
that maybe they could look at different annual fees but he thinks he heard that for clubs or organizations no fee
at all and a lesser fee on the other items.
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Councilmember Brown stated that he thought they were talking about just a one-time application fee and
dropping all of the annual fees and asked if that was correct.
Mayor Schlum replied that he is correct.
Councilmember Dickey said that after hearing what Councilmember Brown said she needs further clar ification
because she thinks there is a benefit to yearly, in any way shape or form and she would like to hear if there is an
option that they are not thinking about right now because they are talking about this on the fly. She does not
want that to be off the table and perhaps they can take out the non-profits and the clubs but she still wants to
know why all of the other cities charge annual fees (is there something they are not thinking about?).
Mayor Schlum replied that he thought that was good and if there are other things that they haven't talked about
they need to explore them as well - the more information the better.
Councilmember Hansen added that perhaps the Council could also receive some information on calls for service
(alcohol related) to see what the impact really is.
The Mayor said he is not sure they want to consider societal costs associated with the issuance of a liquor
license and benefits as well. He added that they could go there but he is personally not interested in going there.
He stated that if there is a problem he thinks it could be addressed in another way, such as working with law
enforcement.
Councilmember Hansen said that she would be interested in just knowing more about that because it is a theory
now and she wonders if there is information to back it up.
Councilmember Elkie stated what they could get is calls for service for a particular bar/location but he thinks it
would be very tenuous at best to calculate DUI's because they don't know if the drivers are coming fr om a bar in
Scottsdale or another city/town. He expressed the opinion that they would spend more in Court and staff hours
than they would collect from the fee.
Councilmember Elkie commented that the non-profits should definitely be on the very low end. He added that
the State does not have a non-profit classification so they have to look at private clubs and work from there. He
said that he is more than happy to look at revised data going forward and looks forward to receiving that
information. He said that despite who was and wasn't aware of this, the fact is that it was in the budget last year
and if the Councilmembers read all of the documents they would be aware of these fees so there was no "smoke
and mirrors;" the information was out there and on the website as well. He added that improvement in locating
the information in an easier place to find is needed. He noted that the Town does have a zoning ordinance to
allow adult oriented businesses (a comment made by one of the speakers earlier in the meeting) in Town
because they are allowed to do that by law. They have been lucky in that no one has approached the Town
about opening one up but that is why they have a fee in place for that which is rather high to perhaps discourage
those businesses from coming to Fountain Hills.
Mayor Schlum noted that most Town fees are one-time fees and this particular one should have been looked at
closer because it does have a recurring fee.
Councilmember Hansen asked if the Mayor is recommending on Page 4 where it talks about the Special Event
Permit for businesses, non-profits and special events - extra fees -- and said that there are some new permit fees
associated with those and she would like to know if the Mayor is recommending that they do not add those fees.
Mayor Schlum said yes, those are the types of ones that stood out. The Town charges $25.00 today and then for
cost recovery purposes there is traffic barricade review, fire review, inspection fee, etc. that are now added for
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consideration for this year. He stated that those are the types of things that if they can he would like to try not to
do; not because they shouldn't be recovering their costs based on necessary reviews, but because they would like
to encourage special events as much as possible. He added that the permit fee was changed to a lower fee but a
per day fee so he is open on that one to whatever Council might consider being the best decision on those fees.
He stated that generally he would like those not to end up being more than they are today and if they can to
lower those as well.
Councilmember Elkie acknowledged the importance of discussing the fees but said that the bigger fish tonight is
talking about the budget as far as what they are going to do and perhaps paying off the bond a nd giving staff
some direction in that regard.
Ms. Ghetti advised that staff will be happy to put all of the materials discussed on line for the citizens to access
(materials provided to the Council).
Ms. Bardow informed the Council that the first time she tried to locate the budget on line it was under "Hot
Topics" and a lot of people couldn't find it so she wonders if on the Town's web page under fiscal of financial
staff could just put the whole thing (right there in the same spot) because it would be much easier for people to
find.
Mayor Schlum stated that they will talk more about the fee schedule on Wednesday.
Mr. Lewis stated that his organization has a bill that is due by June 30th ($500) and w ould request that the
Council hold that in abeyance until a final decision has been made.
Mayor Schlum said that they will talk about that more on Wednesday. He stressed that he does not believe there
is a more Veteran friendly municipality than Fountain Hills in the world and thanked them for all they have
done and all they continue to do to make this a great community.
Councilmember Leger stated that the site with the information regarding the budget/fees should be in really
large letters and should say "Proposed" because that is all it really is at this point. He emphasized that budgeting
is a long planning process and they are still drilling down on it.
Mayor Schlum advised that they will continue with the rest of the budget discussion at this time.
Councilmember Leger noted that Ms. Kavanagh posed a number of questions that have not yet been answered
and said that she is looking at discrepancies between numbers and he believes that can be easily explained.
Ms. Ghetti stated that the first question was the difference between $12.1 million in expenditures and $13.1
million and explained that the $12.1 is basically the first introduction -- this is all the revenue that they have.
She added that when they went before the Council and proposed that they increase the telecommunications and
utilities tax that brought the revenue back up to $13.1 million. She noted that most schedules are prescribed by
the Auditor General's Office and she believes it may be more appropriate for her to sit down with Ms. Kavanagh
and go over them and where the numbers come from. She added that she is happy to do that with anyone who
would like her to because the schedules are not very easy to interpret. She said as far as comparing the cities
apples to apples, that is a very difficult thing to do but staff included public safety, law enforcement, but
excluded anything having to do with enterprise funds or utility funds -- they tried to keep it at operating funds or
general funds and take out all of the other ones that are very different. She advised that staff did the best they
could.
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Councilmember Leger agreed that it would make more sense for Ms. Ghetti to sit down with Ms. Kavanagh and
go through the schedules. He commented on the fact that the numbers have been constantly changing and the
budget is still a work in progress.
Additional discussion ensued relative to the fact that Councilmember Elkie is a member of the Executive Budget
Committee and that Ms. Ghetti is talking about (in layman's terms) using some savings to pay down some of the
debt; taking off $2.9 million and owning the Town Hall free and clear; the fact that this will save the Town
approximately $276,000 over the term of the loan and will free up about $350,000 that could go into the General
Fund and assist the Town in balancing its budget; the fact that another part of it is restructuring the debt on the
Community Center for a savings of $193,500; Councilmember Elkie's support for paying down the Town's debt
and realizing a substantial savings; the fact that it is proper and appropriate to use the interest paid on the excise
tax to pay off the buildings; the sustainability factor; the fact that staff has done a great job and built up Town
savings/funds and in the midst of a decline they started the Rainy Day Fund; the importance of celebrating all
the savings the Town will realize; the fact that the Town can no longer collect General Government fees and the
monies that they have could not finance any of the proposed identified projects and since they cannot collect the
fees anymore, the amount would never increase to the point where they could be used for the projects; staff does
not know how the bond rating agencies are going to react to this specific activity; discussions with the Town's
financial advisors relative to a possible effect on the Town's bond rating and the fact that they are not using the
money they are taking from reserves for operating -- they are using it to pay down debt -- so the advisors do not
believe there will be any impact but until they receive notification from the bond agencies, nothing is set in
stone; the fact that the reserve balance will be brought back up; the fact that no one wants to increase taxes
especially during this economic downturn; Councilmember Elkie's question as to whether staff could come up
with a way to not increase the telecommunications tax and still balance the budget and Ms. Ghetti's reply that
the reason staff included the increase in the sales tax is because they have been telling the Council that whate ver
they do they want to make sure that it is sustainable and staff doesn't want to have to come back to the Council
again next year with this; Ms. Ghetti's comment that if the Council decides that they don't want to increase the
telecommunications/utilities tax staff will do whatever it takes to balance the budget with the understanding that
next year staff will be back because they will just have enough to balance this year's budget (next year there will
be increases in public safety so staff will likely be back); Councilmember Elkie's suggestion that perhaps they
put the increase on hold for this year and see what happens with the road bond (and then come back to the
residents and explain things more clearly after that); community contracts and other items that have yet to be
talked about; Councilmember Dickey's comment that it is important to have courage and their eyes open and
talk about everything (nothing is off the table) and she would like to do that this year.
Mayor Schlum stated that Audra Koester-Thomas has submitted a request to speak and asked her to come
forward at this time.
Ms. Koester-Thomas said she wanted to talk about the new proposed recommendation to fill the revenue gap
and added that according to her calculations there is $1.4 million coming out of the General Fund revenues and
about $500,000 borrowed from ourselves (vehicle replacement, other capital projects, etc.). She stated that she
didn't hear any discussion this evening about how that would be repaid or is that a one-time call and they will
not be refunding those funds.
Ms. Ghetti responded that regarding the $400,000 coming out of the General Fund reserves, that is actually
surplus revenues over and above what is required by the Town's fund balance policy. They would not be
required to refund that and would still be within their policy. The General Fund Reserves of $1 million would
be replaced with any General Fund Reserves that they have this year or next year and the year after. The
$500,000, if required from the Capital Projects Fund or the vehicle replacement fund, would also be replaced
with any General Fund surpluses. She noted that there is $1 million from the General Fund Reserves and
explained that if they drew down the General Fund Reserves by $1 million to pay off this bond, if they have
reserves at the end of this Fiscal Year, which she believes they will based on all the revenues that are coming in
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and their expenditures (likely to have surplus), her proposal would be that the surplus go directly to repay the
General Fund Reserves balance before going to Capital Projects. She advised that they will have to make
adjustments to their Financial Policies (a resolution to do that).
Mayor Schlum asked about the General Government development fees and whether th at is a capital
improvement dollar amount and Ms. Ghetti replied that that is an amount that would not be replenished because
it has to go away (if they don't spend it they are going to have to refund it).
Ms. Ghetti confirmed that the $400,000 is over and above what they have today.
The Mayor referred to the $500,000 capital item and Ms. Ghetti stated that that would be used if required -- if
they needed that (there wasn't enough in surplus funds left over from this Fiscal Year and again staff believes
there will be). If needed they will borrow from the Capital Projects Fund and that will be the first fund to be
replenished with any surplus revenues.
Councilmember Brown commented that he is a little bit more optimistic than some of the statements that were
made tonight. He said that he is in the construction industry and he believes that Fountain Hills is getting ready
to grow again -- he is seeing it and feeling it. He commended the Executive Budget Committee for what he
believes is an absolutely brilliant proposal. He added that if there is any way they can avoid coming up with a
telecommunications tax to balance the budget (and he believes there is) that would be wonderful. He further
stated that he would like to somehow "wring out" a 1% raise for the Town staff. He said he backs this up by
looking at going from 88 employees down to 59 so every employee is doing about one and a half times or
maybe even two times the work they were doing before the slowdown started. He noted that the services
provided are still excellent and he hasn't heard one complaint from one person about depleting services. He said
they really needed to consider doing this for Town staff.
Mayor Schlum clarified that the 1% that was discussed previously was not an across the board raise; it was an
innovation type of bonus. He asked whether Councilmember Brown was talking about something else.
Councilmember Brown advised that he is not a big fan of innovation type bonuses because now they are waiting
for one person or a group of people to say, "You’re the winner" and in one person's eye they may be the winner
when in fact they may not be the originator of it. He said that it gets too complicated. He added that he is
proposing, if possible, an across the board 1% increase. He noted that it would cost about $25,000 plus
retirements and add ons and he doesn't know what that multiplier is, perhaps 18%.
Mayor Schlum agreed that staff has done more with less and said that he is glad that Fountain Hills has been
able to keep staff's salaries level and not institute furloughs like other communities. He said that he would like
to do that too but is not sure they can get that done.
In response to a question from the Mayor, Ms. Ghetti advised that the budget still contains a $25,000
appropriation for the Innovation Program, which would equate to about 1%. She added that they didn't intend it
to be used for raises; it was intended to be for the Innovation Award Program.
Councilmember Dickey stated that she would support a 1% across the board increase for Town staff.
Councilmember Elkie also concurred with Councilmember Brown's suggestion. He noted that the Town has
experienced massive layoffs and cuts. He said that this is a well deserved increase.
Mayor Schlum stated that they will talk further about this.
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Vice Mayor Contino asked if the increase would include the Mayor and Council and Mayor Schlum said that he
didn't believe that it would.
Ms. Ghetti advised that she believes that the Council is okay with the bond proposal to pay off the debt but she
is not sure as far as the telecommunications tax where they want to go with that. She added that on Wednesday
she would like to bring back the resolution to adopt the maximum amount (whatever that is) and if it includes
the telecommunications and utilities tax it will be $39.1 million and if it does not it will be $38.8 million so staff
would like some direction on that (they need to get it published and start moving on that). She added that staff
could still work out the details on the fee schedule and they can reduce the budget and still have the dialogue but
they need to start the clock ticking.
Mayor Schlum stated that he has heard primarily not to look at a telecommunications/utilities tax and said that
they have all been reluctant to increase any taxes and they haven't, except for the bed tax, for at least three years
now. He added that they might have to talk about that next year but hopefully as long as revenues continue to
increase (sales tax) they may be able to get by next year as well.
Vice Mayor Contino discussed expenditure options and said they have law enforcement going from $3.8 million
to $3.4 or $215,500 and the Mayor said that was previously. The Mayor said that they had some good dialogue
that the Vice Mayor was part of and staff is not considering that as an option right now unless they want to bring
it up.
Councilmember Leger asked whether staff is looking for motions from the Council. He said it sounds like they
are in favor of paying down the debt in accordance with the process that has been brought before them. He
added that the other question has to do with the telecommunications tax.
The Mayor stated that the only thing on their agenda is the resolution so is staff just looking for dialogue or a
motion on this.
Town Attorney Andrew McGuire advised that either a motion of just general dialogue will suffice. He said that
tonight he thinks it has worked well to just hear the discussion and Ms. Ghetti has been able to determine when
there has been a Council majority on the issues.
Councilmember Leger stated that he just wants to clarify where they are at. He said he is hearing that the new
option that has been put on the table since the last Council meeting they are on board with (paying down the
debt and restructuring). He added that they are not in favor of increasing the telecommunications tax and noted
that that is a loss of $750,000 and with some wiggle room in there and a contingency fund of $313,000 he
believes that is doable. He said that the Mayor mentioned that staff wanted them to come back with a maximum
on Wednesday and that being the case there is one other piece to the puzzle that they need to talk about and he is
not sure if they want to do that this evening. He stated that that is capital improvements because if they take
money out of the budget this year for capital improvements or defer them, that is going to take down the
maximum amount. He has $825,000 in capital fund reductions that they need to discuss and that will impact th e
maximum. He noted that these are things that he mentioned at the last meeting that he believes are still in the
Capital Funds budget. He stressed the importance of talking about capital if they want to arrive at the maximum
amount.
Ms. Ghetti commented that they can adopt the maximum and still go lower.
Councilmember Leger replied that he understands that but he would prefer to publish the lower number rather
than the higher one.
Mayor Schlum asked where they were on that and what is included in the $38.8 right now and does it include
the $825,000.
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Ms Ghetti responded that the $38.8 is just for next year and staff has not made any adjustments to the budget
document or the numbers. She said that they can bring back information on Wednesday regarding that and have
a discussion on the capital projects piece and the budget. She reiterated that she just hopes that on Wednesday
they can adopt the maximum so they can move forward because they won't have another meeting until June 2nd.
Councilmember Leger stated that to enhance that process so that staff can get a jump start on it, he is looking at
what the Council has and he knows that Mr. Mood is working on it as well so there might be a gap between the
two of them. He said that he is going to mention some things and take notes and maybe in that way they can
save some time going forward. He said that for the capital fund for 2011 -12 he is suggesting that they defer the
following capital expenses:
Project #3008 - Design of Four Peaks Park - $50,000
Project #3019 and Project #3020 - Design of joint parks with the District - $150,000
Defer the Palisades infrastructure (the poles) - $400,000
Project #F4012 - Re-look at the Centennial Project ($125,000 is in the budget) - reduce to $50,000
Project #P3022 - Aerators - Defer out - $150,000
Councilmember Leger advised that the sum total is approximately $825,000 and said that these deferments will
not affect their infrastructure - they are new projects, new start-ups. He added that a lot of it is for design wo rk
that frankly they don't have the money to fund.
Mayor Schlum asked if there was anything else staff should be more prepared for at the next meeting.
Mr. Mood addressed the Council and said he wanted to respond to Councilmember Leger's comments. He noted
that as far as the traffic signal at Palisades & Saguaro, they had one bad pole and took one from the Shea
Climbing Lane project and that $400,000 project has been moved out to Fiscal Year 2015 and staff will continue
to monitor that signal on a yearly basis and adjust it accordingly. He added that with the two parks and the joint
use with the schools, those have been deferred at least one more year so that is $150,000 they moved out
already. He stated that the Fountain Lake water quality improvements is still in this year's budget but staff
agrees that it can either be moved out or reduced. He added that they probably would want to hire a Sanitary
consultant to put together the Lake Management Program so there may be some expenditures there but
obviously a lot less than $150,000. He further stated that as far as the Four Peaks Park Master Plan, the $50,000
is in this year's budget but he can talk with Mark Mayer about perhaps moving that out for a year. He added that
for the Centennial Circle, staff lowered that from $125,000 to $110,000. He said that they can look at reducing
it further but they don't have any design plans unless Mr. Mayer has something that has a better estimate that
they can talk about.
Councilmember Leger thanked Mr. Mood for his input and said that is all he wanted to clarify because he knows
that Mr. Mood has been working on these things and for the Council to be able to adopt the maximum on
Wednesday if the adjustments are made between now and then it would be helpful. He s aid he doesn't know
how the rest of the Council feels about this but they can talk about it Wednesday.
Councilmember Dickey stated that they are not going to go into the community contracts as far as Wednesday
goes -- that will just be something later on down the line.
Ms Ghetti advised that because they are so late in the program staff has not had a chance to have dialogue with
any of the groups yet. She noted that staff has contacted most of them and said bring forth your proposal and
then the Budget Committee will continue to look at those and come back with a recommendation and fi ll in the
amount -- they can make adjustments.
Mayor Schlum commented that right now what is in the budget is a 20% reduction and Ms. Ghetti concurred.
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Councilmember Leger extended his appreciation to staff and to the Executive Budget Committee for their
excellent, hard work and creative solutions.
Mayor Schlum said that he liked the format of the meeting; they received a lot of public input and he hopes that
they receive more. He encouraged attendance at the Wednesday meeting and thanked everyone for their
valuable input.
AGENDA ITEM #2 - ADJOURNMENT
Councilmember Brown MOVED to adjourn the meeting and Vice Mayor Contino SECONDED the motion,
which CARRIED UNANIMOUSLY (7-0). The meeting adjourned at 8:18 p.m.
TOWN OF FOUNTAIN HILLS
By __________________________
Jay T. Schlum, Mayor
ATTEST AND
PREPARED BY:
________________________________
Shaunna Williams, Acting Town Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Special Budget
Session held by the Town Council of Fountain Hills on the 23rd day of May 2011, in the Town Hall Council
Chambers. I further certify that the meeting was duly called and that a quorum was present.
DATED this 16th day of June 2011.
__________________________________
Shaunna Williams, Acting Town Clerk