Our town currently depends on sales tax to fund 60% of its budget. That’s another great reason for all of us to patronize the shops and restaurants in our town.
Unfortunately we have a relatively concentrated sales tax base, unlike Cave Creek. Sales tax is volatile and fluctuates with the retail industry. When retail activity drops off, which can happen in an economic downturn, our town’s revenue and ability to pay for our expenses drops. With mostly fixed expenses, that becomes problematic.
Carefree currently has an $11.5 million dollar capital reserve. This is for infrastructure and capital improvements such as paving roads, improving drainage, crosswalks, signage, and maintenance of town buildings, sidewalks and walls. In fact, there is a projected schedule of $25.5 million in capital improvement projects between now and 2027.
Some have asked why we don’t re-prioritize to use these capital funds to fund our fire services. The answer is that some are not discretionary expenses, such as projects already in progress and replacement of equipment, and the rest are integral to making our town economically viable, clean, safe and beautiful. It’s not ideal if our town starts to deteriorate. Remember that we need to attract sales revenue, and to maintain our home values.
For us to sign a 25-year contract and get admitted into automatic aid, we need to demonstrate a sustainable, stable operating revenue stream. Our provider would take on significant hiring, training and pension costs, and needs to be sure we’re a long-term partner.
Property tax demonstrates stability; sales tax does not.
Let’s be clear: Without this tax we will not get automatic aid. Those who think the town can do this without a property tax don’t understand the town’s projected financial position.
Sarah Gondell
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