Shooting BBs at Goliath
By Linda Bentley | December 9, 2009
Carefree saves by not spending money it doesn’t have?
CAREFREE – Mayor David Schwan presented council with an updated 2009-2010 budget summary during the Dec. 1 council meeting to review the current status of the town’s finances.
In his report to council, Schwan indicated the town’s 2009-2010 budget is very tight and described it as “bare bones.”
Schwan stated sales tax revenue through the end of October was 19.5 percent below budget. He said if the current trend continues through the end of the fiscal year, “Carefree could have an income deficiency of approximately $600,000.”
He pointed out two expenses not included in the adopted budget, one of which was $10,000 to change the mortgage on the 8 Sundial Circle building from a commercial rate of 6.952 percent to a municipal rate of 4.52 percent.
According to Schwan, the annual savings will be $7,750 with a payback period of 15.5 months.
The other item was the recall election, for which Schwan said the town has already spent $10,000 in legal fees.
Although Maricopa County Elections estimates the cost of the election to run between $4,000 and $5,000, due to the “contentious nature” of the election, Schwan said he estimates the election will cost around $25,000, including additional legal fees, which is $18,000 in excess of the $7,000 budgeted.
As Councilman Peter Koteas reviewed the mayor’s budget report, he noted, “Don’t spend contingency” was listed as an expense reduction initiative totaling $260,000 in “savings,” and asked how “not spending $260,000 in money we don’t have” constituted a savings.
Schwan responded, “Maybe that’s my fault for labeling that savings” and apologized if he misled anyone by using the word savings.
Koteas said, “We spent $448,000 more than we brought in.”
Town Accountant Jim Keen said they were looking at three months of revenue and four months of expenses.
Schwan told council, “You’ll get to know how this all ends next year,” when all the figures will be available for the year.
Councilman Doug Stavoe said the town’s revenue was down 19 to 19.5 percent, stating, “We’re spending $178,000 more than we’re receiving in revenue.”
Vice Mayor Glenn Miller pointed out the first quarter consists of the summer months and said, “We’re looking at the worst months.”
Keen affirmed Koteas’ statement that revenue for October, compared to October of last year, was 17 percent less.
Stavoe said coming up with a budget was council’s job and stated the four highest town expenditures were, from highest to lowest, Rural/Metro Fire contract; salaries; contract with Maricopa County Sheriff’s Office; and Carefree Municipal Court.
He said, “I’ve not seen any cuts in these areas. When we see revenues plunge and no significant adjustments …” indicating the town needed to take bolder action “instead of shooting BBs at Goliath.”
Schwan said Carefree was one of the few towns that has a large amount of unrestricted funds in the bank and stated, “We can’t look at revenue by one month.”
During public comment, John Traynor said, “Last month we were told there was going to be a comprehensive review … Frankly I’m disappointed.”
Traynor pointed out Arizona is expected to lag two-three years behind in recovery, while confirming to a nodding Keen the shortfall was $448,000, and said, “We are down substantially over last year. There’s been no substantial effort to look at what it costs to run the town. These are eyewash and mouthwash solutions.”
As Traynor returned to his seat, Schwan said, “My door is always open to anyone who has specific recommendations.”
Traynor stated, “I don’t get that impression.”