Jun 222011

By Teri Walker–

City of Holbrook staff members are in the final stages of preparing the fiscal year 2012 city budget for tentative approval on July 12.

In a budget work session held June 14, staff and council reviewed the latest iteration of the draft 2012 budget, which stands at nearly $9.7 million.

Noting the bottom line hasn’t changed since the previous draft, Finance Director Randy Sullivan and City Manager Ray Alley provided an update on refinements being made to the budget.

A total of $105,471 from the general fund is being shifted to the Highway User Revenue Fund (HURF), which will go toward continued road improvement projects. Sullivan reported that shortfalls in HURF funding from the state, to the tune of $134,000 this year alone, have cut into road funds. Because the city has accrued savings through revenue increases and reduced spending, staff sought approval to support needed roadwork with the general fund.

Mayor Jeff Hill said that while pulling from the general fund is a workable way to support roadwork for the short term, it isn’t a sustainable budget practice. Noting it could be two to three years before disbursements from the state will begin to increase again, Hill asked whether city staff had a long-term fix.

Alley said the future of state funding is uncertain, so the city needs to build its savings and stay conservative.

“The only chance the economy will give us right now is conservative budgeting and managing our spending,” said Alley.

The lodgers tax disbursements have been updated to include the recent council decision to provide the chamber of commerce and the old Navajo County Courthouse with funding for personnel totaling $54,000, and $265 per month for maintenance of the marquee in Gillespie Park.

A total of $40,000 in utilities funding is designated for upgrading infrastructure; some of the money may go toward a flow study for the city, for which a proposal has been requested from city engineer Caleb Lanting.

The conversion of the city police dispatch services to county operation will result in an annual savings in personnel costs of $109,000, in addition to other operations savings.

The city will be purchasing electronic notebooks, in the amount of about $500 each, for the mayor and council members to cut down on costs associated with developing the agenda and informational packets that are prepared for every council meeting.

In the regular council meeting preceding the budget session, Sullivan reported the city’s savings stood at $213,560 higher than this time last year, and noted that tax revenues were higher than projected by approximately $86,000. He said the city has made some changes in savings plans that are meriting greater interest payments, noting that the city earned almost $5,000 in interest during the month of May under the new savings plan. Sullivan said the city had projected to earn $5,000 in interest for the entire year, so the higher yields of the new savings accounts will result in greater than anticipated income for the city.

The city council asked staff to consider a few other items as they completed the proposed budget, and to consider requests for future budget planning.

Vice Mayor Charles Haussman requested a summary of the amount of money still owed on police vehicles purchased in recent years and when the city will need to begin replacing older vehicles.

Council members noted that the fire chief has put in a request for a new truck for the past two years, and asked staff to look into adding a truck to the budget next year.

Mayor Hill asked staff to explore whether there are more cost-effective options for managing wastewater, specifically the treatment and hauling of sludge. He noted that currently the city contracts to have the sludge removed and injected elsewhere, and questioned whether the capital investment for onsite treatment, while an expensive one, would be cost-effective in the long term.

Haussman asked whether any of the buildings on the former Northland Pioneer College property had leasing potential. The decision was made for council and staff to tour the facilities to make an assessment of whether the buildings may be turned into assets.

After discussion with the council, Alley and Sullivan determined to develop a five-year capital improvement plan, and a summary of debt service obligations, outlining when major bills for items such as vehicles and equipment will be paid in full.

As the budget meeting concluded, Hill asked staff and council to consider the potential growth over the next few years should the potash mining being explored in the area come to fruition, bringing hundreds of temporary and long-term jobs to the region.

“Short-term, rapid growth can be hard to manage,” Hill said, and asked that council and staff continue to be focused on how to prepare for the potential growth.

If the city council tentatively approves the budget on July 12, it will move forward for final approval on Aug. 1.