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Flagstaff City Council

Pictured from left to right are Councilmembers Eva Putzova, Scott Overton, Mayor Coral Evans, Councilmember Celia Barotz, Vice-Mayor Jamie Whelan, Councilmembers Charlie Odegaard and Jim McCarthy.

Jake Bacon, Arizona Daily Sun

Large construction projects throughout the city gave Flagstaff a boost in sales tax revenue this year, but city officials caution that such a bump may not come in future years if the amount of construction levels off.

Rick Tadder, the management services director for the city, told the city council at the budget retreat last week that construction and contracting taxes were the largest sales tax gain in the city so far this fiscal year. That category of sales tax made up about a third of the nearly $1.5 million increase in sales tax the city is on track to experience over the 2017 fiscal year.

City sales tax represented the highest single increase in reported revenue, but most revenue sources, except for franchise fees, experienced increases and are projected to end with increases this fiscal year, Tadder said. In the 2018 fiscal year, the city is projected to collect $20.5 million in city sales tax, up from $19 million in 2017.

In Tadder’s presentation, the projected sales tax revenue for the 2019 fiscal year was $20.6 million. Tadder said he was keeping the projection “rather flat” because the city could not rely on construction and contracting sales tax to continue to grow at the same rate as the 2018 fiscal year.

However, while the city is projecting new revenues of about $4.68 million this coming fiscal year through a combination of one-time and continued funding, new fixed and committed costs could be up by $3.16 million, Finance Director Brandi Suda told the council.

One of the biggest increasing costs is the city’s required contribution to pension systems, including one for public safety and another for other city employees. The increased contribution is projected to cost the city $1 million this budget cycle, Suda said in her presentation. The city also has employee raises written into its committed costs, and could cost the city between $500,000 and $1.5 million.

Tadder said the city is anticipating steady growth in revenues for the next three years, but the city has built in a plan for a recession in its five-year projections.

Interim City Manager Barbara Goodrich will present the council with a proposed budget in April. But for now, many departments are asking for extra funding with any of the $1.5 million or more that is left over after the city has paid its fixed and committed costs.

Both the police and fire departments addressed the council and described increases in calls for service from both departments while having lower staffing than before the recession.

Kevin Treadway, the police chief, said the department often spends time and money training recruits, only to have them leave the department soon after for a job in the private sector or with another department that provides merit-based raises, which the city ended years ago.

Treadway said Coconino County Sheriff’s deputies make nearly the same amount as police officers but do not have the call volume police officers do, and the department competes with the county for staffing. Merit-based raises, Treadway said, could provide an incentive for officers who train in Flagstaff to stay in the department.

As part of the budget discussion, the council gave directions to move forward with a November bond election to fund affordable housing. Housing Director Sarah Darr will come back before the council with possibilities for ballot language, which could include funding land acquisition, construction and redevelopment. A recent ECONA report said the city's affordable housing gap is close to a crisis. 

The council also discussed allotting money to graffiti abatement, working with the Indigenous Circle of Flagstaff to create a strategic plan for future work and signing a letter of support for grant funding for service providers in the city for the disabled and other vulnerable populations that rely on Medicaid and state funding and have been adversely affected by chronic underfunding and increasing costs, like a higher minimum wage.

During the 2018 fiscal year budget cycle, which ends June 30,  the council opted to raise the city's primary property tax levy by 7 percent, or about $400,000,  to fund extra positions for police and fire. The increase was part of a planned, retroactive two-phase increase that would include the council approving another 7 percent increase in the 2019 fiscal year. 

That plan meant a $17 tax hike on a home worth $300,000 in the first year, plus an additional $17 increase the second year, with a combining effect of a $34 increase.

The council has yet to weigh in on the second phase of the property tax increase. 

Letter to the Editor: Deep in the heart of taxes

The reporter can be reached at cvanek@azdailysun.com or 556-2249.

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City Government and Development Reporter

Corina Vanek covers city government, city growth and development for the Arizona Daily Sun.

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