The Town Council meets every year around Ground Hog Day to discuss the upcoming budget and projections for projects and revenues for five years out. These day-long meetings tend to be repetitive by nature, focusing on how to balance expected revenues to projected expenses.

That question took on some urgency this year after the sound defeat of a proposed primary property tax by voters last May. While it was clear the council has no interest in going the route of proposing a property tax election again there was one revenue proposal that came from a somewhat unexpected source.

Councilman David Spelich was elected in August after running hard on opposition to the property tax and taking a strong stand against irresponsible spending. It was Spelich that presented to the council a proposal worked out by himself and Gerry Friedel, another fiscally conservative candidate for the council last year who failed to be elected.

Spelich called this revenue option the Fountain Hills Infrastructure and Maintenance Fee. His proposal is of limited duration – four years – and collects a single annual fee from parcel owners similar to the existing Environmental Fee, which would be eliminated by the new fee, according to Spelich.

The new fee would be different for residential parcels and commercial parcels. The residential program would begin at $350 in the first year, and decline by $50 each succeeding year down to $200 in the fourth year.

The commercial fee would begin at $400 and also decline by $50 each year of the program.

Spelich said they estimate the program would raise about $18 million over the duration.

“I believe the people in town will pay as long as they know what they are paying for, I think they will be for this,” Spelich said. “I found six of the most negative people I could find and presented this, and they all supported it.

“It is a clear, concise plan from beginning to end.”

He noted that following the election he was able to sit down with all the staff directors and was very impressed by their hard work and dedication, all with a shoestring budget.

“There is no more room to cut,” Spelich said.

Council input

Vice Mayor Art Tolis applauded Spelich’s effort, but seemed not entirely sold.

“I thank you for coming up with something,” Tolis said. “I also am not interested in going back to the voters for a property tax.”

Tolis suggested it is a good starting point for staff to work on refining a proposal.

Councilman Mike Scharnow said his concern is what happens in year five.

“Do we start over?” he asked.

Councilman Dennis Brown said a lot of thought went into the $7 million amount proposed by the transaction privilege tax question last May.

“We didn’t pull the amount out of thin air,” Brown said. “You (Spelich) have a good idea, but it is a Band-Aid compared to what we need.”

Mayor Ginny Dickey said the proposal is a good idea, and similar to other options, however she would like staff to tweak numbers and provide a proposal.

Tolis agreed he wants staff to provide some options, maybe something along the lines of a general obligation bond.

Obstacles

Several of the issues surrounding the Spelich plan start with collection. The town uses a private company to collect for the Environment Fee, and there is little recourse for the town for those who do not pay the $36 annual fee. There is a fairly good return to the town of around 90 percent on that fee. The larger amount could pose problems.

Brown touted the idea as telling people the plan costs just $1 per day. However, there are many people in town where the property tax would have added far less than that to their bill. State law does not allow the town to implement such fees based on property value or size. The amount must be the same for all properties. That means some smaller homes of less value are subsidizing larger homes worth much more.

The fee would not need voter approval, as with the Environmental Fee it could be enacted by a majority vote of the council. The primary property tax, and similarly a general obligation bond would need voter approval.

Budget picture

Finance Director Craig Rudolphy presented a conceptual budget proposal for the 2019-2020 fiscal year of $33,053,900. That compares to a $32,414,866 budget for the current fiscal year.

Rudolphy is also projecting a budget shortfall totaling $1.7 million over the next five years. Most of that, just over $1 million falls in the final year.

The capital improvement budget projection for the next fiscal year totals $2.2 million. Two large capital projects, which have been in the budget for several years, Fire Station #2 and the Adero Canyon Trailhead are now complete and do not show up in next year’s budget plan.

Parks projects, upgrades to the Golden Eagle flood impoundment area aimed at preventing future flooding ($500,000) and $335,000 for Four Peaks Park improvements, are the largest items in the capital budget next year. Unpaved alley paving, which has been deferred for a couple of years, would use $255,000 in capital funds.

The budget process will continue through the spring with a tentative proposal presented for council vote in May and final approval expected in June. The new fiscal year begins on July 1.