On June 20, 2022, the Town Council approved the 2023 budget. It overcomes major external challenges. Revenue from sales tax is projected at a 14% increase. Subsidies to outside regions are fundamentally eliminated. Town debt is on a steep trajectory downward and will have dropped from $62 million a few years ago to $24 million by July 1. The new emergency services spending is fully covered without new taxes and lower than projection. Critical water projects are planned. They will be funded partially by grants with the balance handled through borrowing.
Borrowing fairly spreads the cost of capital improvements to future users thus lowering the burden on current customers.
The fiscal year 2023, July 1-June 30, was approved 6-0. The critical, and little understood, feature of Arizona Municipal budgets is that they are overall spending limits.
The general fund pays for roads, most salaries, accounting, public safety and importantly, the new fire department. This year’s budget carries the first full year of over $3 million in new spending for emergency services through Daisy Mountain. This added cost is largely covered by revenue improvements at the current tax rates and eliminating transfers to the water companies.
The one area to watch is the current high construction tax revenue. It could drop if residential construction drops. There are several reasonable ways to mitigate this if it occurs. Rising sales tax revenues, especially from food related businesses, will stay high as proved by the steady, increasing revenue during the Covid lockdown.
The equally large utility budget faced the challenge caused by the loss of revenue from the 550 Carefree customers, which had a large negative impact. The ongoing capital expenditures to build the Phoenix back up water posed an added challenge. This was solved by eliminating long standing subsidies to the Desert Hills Water Company, seeking grants, and borrowing the modest balance for critical Capital improvements.
The Town has been informed that our request to partially fund water projects has been moved forward for consideration at the federal level.
Significantly the accounting policies which obscured financial performance and subsidies to the water companies have been corrected. For the first time in my 10 years of work on the utility systems we will have correct and reliable numbers to set rates, judge performance and eliminate or manage subsidies.
Plus, payoff of the massive loans used to buy and build utility systems is in sight! Beginning in 2027, which is the last year in the planning horizon, those loan payments begin to be fully paid off. This payoff completes in 2030.
In summary major changes have been made to provide life saving emergency services without new taxes, deal with loss of revenue and build critical water projects. The Town water has never been cleaner or more reliable and more improvements are on the way. The Town has never had better emergency resources. And the residents have been relieved from Rural Metro fees of the past. The wisdom of reliable sales tax revenues from Carefree Highway and southern Cave Creek Road is clear.
The budget process and documents are completely transparent. All the documents used by Council are supplied for the public in agendas, minutes, and web postings. Three budget meetings/hearings were held. Public testimony was taken so voices both pro and con had the opportunity to express concerns or recommendations.
— submitted by Bob Morris
Cave Creek Town Council
