KINGMAN – The city is reducing its debt, and the increased sales tax rate could bring in an additional $3.1 million, but projections for the 2018-2019 fiscal budget aren’t much different than a year ago, Interim City Manager James Bacon said Tuesday.
Operating revenues have rebounded from their low point seven years ago, surpassing prerecession levels, Bacon said Tuesday during a budget workshop with City Council.
Estimated operating revenues for fiscal 2018 are estimated at $29.9 million, compared with $28.7 million in 2017.
Bacon said it’s difficult to come up with a formula that works every year for budget projections. If you figured a 4 percent annual increase in the budget, you’d miss the mark every year, he pointed out.
“You had a $3.8 million projection for TPT (Transaction Privilege Tax) and only brought in $3.6 million,” Bacon told Council. “Financial analysts spend three-fourths of their time trying to get those numbers right.”
The estimated operating budget for 2016-2017 was $26.5 million, and the actual budget was $28.7 million.
Bacon said his hope is that Finance Director Tina Moline can bring such variances into a smaller band over time. Projections will be refined as more information becomes available, he said.
The U.S. Conference Board is forecasting 3 percent economic growth in 2018, slowing to 2.8 percent in 2019 and 2.2 percent in 2020.
Arizona’s economy is going to be “bigger, wealthier and slower,” according to economists at both University of Arizona and Arizona State University. They see a big increase in residential building permits, though Bacon said that’s not something he expects in Kingman.
The four most important topics that will affect Kingman’s future are the sales tax rate, street preservation, capital improvement plan and strategic financial plan. The budget includes $3.2 million for street repair and replacement.
Bacon said employee salaries are projected at $12.2 million in 2018, not yet back to 2008 salaries of $13.5 million, but their total compensation package including benefits has increased to $19.5 million, up from $18.9 million in 2008.
“That tells you what you probably already know about the cost of benefits,” Bacon said. “The two drivers on benefits are health care and pensions.”
He suggested the Council make it a priority to come up with a strategy for reducing Public Safety Personnel Retirement System liability.
Among the options would be to fund contributions at the beginning of the year rather than as costs are incurred, determine budgeted vs. actual PSPRS payments, and dedicate funding above the required amounts.
Bacon outlined a number of budget priorities for Council at the three-hour workshop, including economic development, recruitment of an economic development director and funding the department.
His comments from the slide presentation: “No economic development strategic plan! This is where money to deliver public services comes from. Need to build city department of economic development and tourism from ground up. Need to prepare for city airport operations. Need to bolster tourism efforts. No infill plan/incentives for vacant buildings. No downtown revitalization plan.”
Tentative adoption of the budget is set for June 5, with final adoption of on June 19.