Holbrook Is In Good Shape Financially

By Tammy Gray-Searles
   State sales tax and property tax revenues are lagging for the City of Holbrook, but Finance Director Randy Sullivan says that the city is still in good shape financially.
   “January and February are typically way down for sales tax,” Sullivan noted, explaining that he expects the difference to be made up over the coming months.
   He noted that not only is tourism normally down significantly throughout Arizona during January and February, but sales to residents also normally drop after the Christmas rush.
   “Generally, the spring usually does better. We should see the numbers reflect that in March,” Sullivan said.
   Tax revenues are down overall by a total of $35,440.82. In other words, the city has received $35,440.82 less in tax revenues than it anticipated it would by the end of February. That number includes local city sales tax revenue, which is almost exactly on track, with 66.4 percent of anticipated tax having been collected at 66.7 percent of the way through the fiscal year.
   As of the end of February, the city’s general fund is operating at a total loss of $34,914.19, having taken in $2,635,540.71 and spent $2,670,454.90. Sullivan noted, however, that the city has not yet received $75,000 from the flood control district that is expected to bring the budget back into the black. He also pointed out that the budget calls for transfers from the city’s Local Government Investment Pool (LGIP) fund into the general fund, and none of those transfers have been made.
   “No transfers have been made out of LGIP,” he noted. “Transfers were budgeted at $822,000. No transfers will be made until it is necessary.”
   The LGIP fund essentially serves as the city’s savings account.
   Sullivan also pointed out that even though revenues are down overall, spending is also down throughout most departments. According to a financial report supplied by the city, 12 departments have spent 56.1 percent or less of their total budget at 66.7 percent of the way through the fiscal year. Those departments include city council, city clerk, magistrate court, community development, finance, recreation, swimming pool, police, levee, airport, streets and grants.
   Only 20.1 percent of the levee budget has been spent, but $151,652 budgeted for professional services related to recertifying the levee has not yet been paid out.
   The airport is still operating at a loss, since revenues are down by $18,777.58.
   Utility departments are also cause for some concern, with sanitation and water departments having already spent 70.9 and 71.2 percent of their budgets, respectively.
   In a report to the council, Sullivan noted, “Management is keeping a close eye on the sanitation and water departments which are currently at 4.2 and 4.5 percent over budget.”
   The largest expenditures in both departments are for wages and salaries, with 72.6 percent of the budget for wages and salaries having already been spent in sanitation and 81.1 percent of the budget for wages and salaries spent in the water department.
   Lodger’s tax revenues are on track, with $120,060.17 of the anticipated $180,000 having been collected. The lodger’s tax budget, however, shows a $17,723.34 deficit. Sullivan explained that the deficit is due to unanticipated legal fees.
   “The lodger’s fund is currently operating at a loss of $17,663.17. This is mainly due to legal expenses related to the past economic development director position of $17,723.34 that were not budgeted,” he noted.
   Highway User Revenue Fund (HURF) revenue is well below the amount anticipated in the budget, but city officials have been aware for some time that the state would be cutting HURF funds. As of the end of February, the city had received $485,596.24, or 41.1 percent, of the anticipated $1,180,356 in HURF revenue. Sullivan noted that HURF expenditures are also down in order to balance out the lower revenue. The city has spent $311,763.75 of the HURF money it has received.
   As expected as the financial year has moved forward, interest earnings have not been as robust as city officials had hoped when the budget was prepared. The city expected to earn $68,000 in interest in fiscal year 2008-09, but as of the end of February had only earned $17,013.89, or 25 percent of anticipated interest revenue.
   Gas franchise and electric franchise fee earnings are also down, with 57.3 percent and 49.2 percent of the anticipated revenue collected for each franchise, respectively.
   A number of planned capital expenditures have not yet been made, including completion of the cemetery fencing project; landscaping, lighting, curbs and sidewalks at the library; fire equipment; renovation of the old library; creation of a redevelopment district; community cleanup, water line upgrades, relocation of water wells and upgrades to the Sun Valley water system; sewer line upgrades; golf course clubhouse improvements; and street improvements. Some of these projects will begin in the spring, before the end of the fiscal year, but others will be pushed back due to a lack of funding.
   Sullivan noted that even though revenues are slightly down, he still believes the city is in much better financial shape than many other government entities, and he expects the fiscal year to end with revenues having caught back up to anticipated levels.
   “We will continue to monitor all expenses and believe that there is no reason to be concerned as of yet, as we anticipate making up this deficit,” he reported to city council members.