This is part two of a series of articles The Times is doing related to Town of Fountain Hills finances as residents prepare to go to the polls May 20 to consider a primary property tax.

Part 1: Series begins on property tax vote

There are many highly skilled and professional people for which balancing a checkbook in their everyday life is a challenge.

At the same time there are businesses and governments that by law or efficiency must keep track of their finances by maintaining separate accounts for different aspects of the operations.

For the Town of Fountain Hills and all municipal government entities this is known as “fund budgeting.”

Town of Fountain Hills Finance Director Julie Ghetti gives the definition of fund budgeting from the National Council on Government Accounting, but she also provides a simpler explanation.

“…Funds are created to account for specific governmental purposes,” Ghetti said. “All governments are required to maintain a General Fund that is utilized for general (non-restricted) assets, liabilities, revenues and expenditures.”

Ghetti notes that in non-profit situations, such as governments, accountability is the measure used instead of profitability.

“The main purpose is stewardship of financial resources received and expended in compliance with legal or other requirements,” Ghetti said.

The town has five separate funds in its 2007-08 fiscal year budget. Besides the General Fund there are the special revenue funds, debt service funds, development fees and capital projects funds.

For this story the focus is on the General Fund, this series will discuss the others at a later date.

The town’s General Fund revenues over the previous three years are as follow:

04-05 - $15,561,387
05-06 - $17,196,192
06-07 - $16,907,188

Revenues exceeded the budget except in 06-07 when the budget was $16,948,360.

Where exactly does the town get the money for the day-to-day operations covered by the General Fund?

The town’s budget document for 2007-2008 shows a total of 22 different sources of revenue coming into the town’s General Fund.

The intergovernmental sources, most commonly considered “State Shared Revenues,” include state sales taxes, fire insurance premium tax, shared income tax and vehicle license taxes. The money comes in from these various sources and is redistributed to communities with a formula based on population.

At budget approval time last summer these sources were estimated to total $7.2 million. At the end of the second quarter, Dec. 31, the income was running 92 percent of projections, according to the town’s quarterly financial status report.

Local sales taxes and franchise taxes account for $7.2 million (slightly more than state shared revenues) of the General Fund revenue. The local sales tax is projected to bring in $6.9 million this fiscal year, and franchise taxes $320,000.

Charges for town services, which include Parks & Rec user fees, Senior Services fees, encroachment permit fees and subdivision fees, are expected to bring in $436,321 this fiscal year.

The fees citizens pay for licenses including dog licenses, business licenses, building permit fees, landscape permit fees, rezoning and variance fees and review of improvement plans should bring in about $1.37 million, with more than $1 million of that in building permit fees alone.

The town expects to collect $209,705 in court fines.

At the Community Center rental fees and bar sales are projected to total $229,300.

Miscellaneous sources of revenue including leases, interest on investments and other items are expected to bring in $515,475.

At budget approval time the revenue sources were projected to bring the town $17,205,111. Indications are after the second quarter revenues are running behind, but staff has a practice of making spending adjustments to cover any shortfall.

The town’s General Fund expenditures over the past three fiscal years were as follows:

04-05 - $12,692,032
05-06 - $12,930,543
06-07 - $14,271,327

Expenditures were under revenues for all three years.

How is the money from the General Fund distributed to the various town departments?

Expenditures are broken down into 17 different categories, primarily by department.

The budget for the current fiscal year has five departments with budgets that exceed $1 million, and general administration is just shy of that at $973,055.

The public safety entities, fire department and Sheriff’s Office, have the largest budgets, and both of those are services paid under contract with Rural/Metro Corp. for fire and emergency medical services ($3,059,326), and the Maricopa County Sheriff’s Office for law enforcement ($2,790,900).

Both of these contracts have escalator clauses. The MCSO contract has increased by $1 million since the 2004-2005 fiscal year. This is due mostly to manpower and service adjustments.

The Rural/Metro contract has increased by almost $600,000 since 04-05.

Parks and Recreation has a budget of $2,147,773. The Public Works budget is $2,267,891, and there is a $1,202,350 line for operation support. Those are the resources shared by all departments such as legal, insurance, auditing and support for local agencies such as the Boys’ and Girls’ Club, theater, food bank and tourism.

The town has its budget documents and Comprehensive Annual Financial Reports going back six years on its Web site, www.fh.gov. It also has quarterly updates on the Web.

Next week The Times will be looking at where the town gets the money and how it spends the revenues for special funds.