The Town Council held its first public discussion regarding the proposed budget plan for the 2022/2023 fiscal year at a work session on April 12. The council is to consider a vote on the tentative budget plan at its regular meeting on Tuesday, May 3, with final adoption scheduled for the June 7 council meeting.

In his remarks in presenting the budget plan Town Manager Grady Miller said the $40,490,451 fiscal plan includes a $23,266,912 General Fund budget. The remainder includes the capital funding plan and the Street Fund budget.

Normal postings for public review will be available after the tentative budget approval. This year the posting includes a ClearGov budgeting platform that presents the document on the Town website, fountainhillaz.gov. That is available now. Miller said this platform provides for greater transparency and easier navigation.

“The spending plan highlights the Town Council priorities over the next fiscal year,” Miller said. “This is the most important job the council does.”

The council had some discussion regarding how to address fund balances. The Town received $4.2 million from the American Rescue Plan in July 2021 and is anticipating an additional $4.2 million this July. That money was directly earmarked for public safety services, with $3.4 million toward the Rural/Metro contract and $800,000 to the contract with MCSO for law enforcement. That provided savings in the General Fund that could be used elsewhere. That is initially being transferred to the Facilities Reserve Fund. Potential uses for that money in the future include street pavement improvements and Fountain and Fountain Park enhancements, including the possibility of lake liner replacement in the future.

Staff is proposing to put $500,000 in an Environmental Fund primarily to address stormwater issues, $500,000 in the facilities reserve and $1 million toward future lake liner replacement. Remaining money would go into the Capital Improvement Fund.

Councilman Alan Magazine said he has concerns that the Facilities Reserve is heading toward a negative balance too fast. Finance Director David Pock confirmed that a negative balance for the fund could appear as soon as the 2027 fiscal year. Pock said he will be providing the council with an update when the year-end projections are more solidified and will include inflation projections.

“The numbers will be clearer as we approach the end of the year,” Pock said.

Miller said he has some concern but said the Town does have the option to ask voters for bond authority for some major projects such as street improvements and even lake liner replacement. It should be noted that the Town received a good report on the condition of the lake liner from an engineering firm about a year ago, so there appears to be no immediate need to address that.

The Town is currently negotiating with the Fountain Hills Unified School District for a potential lease arrangement for the Four Peaks Elementary School building. For budget purposes, $75,000 for the lease has been included in the budget planning. Economic Development Director Amanda Jacobs said the proposed lease is for three years for the Town to work in partnership with Business Advisors on a business incubator project. The total over the three years would be $225,000. Councilman Gerry Friedel said he has concerns regarding the Town’s obligation for repairs.

“This is not a done deal,” Miller said. “We are working through some of our concerns with the district. We are doing our due diligence before we come back to (the council) with a recommendation.”

The incubator is expected to generate some revenue and Miller said the Town expects to be close to break-even or possibly subsidize about $50,000 of the three-year total.

Capital plans

The capital budget proposal totals $7,713,200 combined between Public Works and Community Services. A couple of items on the proposed Capital Improvement budget generated some discussion. A proposal to fund design work for a roundabout for the Saguaro Boulevard and Avenue of the Fountains intersection ($150,000), as well as design for pedestrian access and lake overlook amenities at the same intersection ($180,000) was somewhat controversial in the council discussion.

“I don’t think we should spend this money on this project this year,” Councilman Alan Magazine said.

“I am vehemently opposed to this,” Councilman David Spelich said.

Friedel also expressed his skepticism about the plan.

“I understand the concerns,” Miller said. “We have been very fortunate in applying for and seeking out grants for this type of project.

“If we have this shovel ready (complete design) we are in a better position to receive grand funding.”

This could include federal infrastructure money.

Councilwoman Sharron Grzybowski said she wants assurance that any outside stakeholders be involved in discussion that impact the park facilities. She noted that the disc golf facility in the park is well known across the country, and she would not want to see impact without some input from such users.

Magazine said he has repeatedly asked for information from staff on how capital money could be used if it were not used for planned projects. He said he has never received such information.

“We need to be very cautious to distinguish between wants and needs,” Spelich said. “A lot of this money could be spent elsewhere.”

Councilman Mike Scharnow noted that putting the money in the budget does not mean it has to be spent.

“The council has the opportunity to reject a contract if they think the cost is too high,” Scharnow said.

Mayor Ginny Dickey said she views the intersection work to be a safety issue for the town.

“We can budget for this but don’t need to act,” Dickey said. “With infrastructure dollars becoming available, it makes sense to have the design so we can go forward if the money becomes available.”

Another proposed capital project that split the council is a staff proposal to install and 80-foot diameter shade structure in Centennial Circle between the Community Center and Library/Museum.

Community Services Director Rachael Goodwin is asking for $235,000 in the budget for the project. She said it would work as an extension of the Community Center for events and activities. She estimates it could generate about $8,000 annually in revenue.

Friedel asked whether it would make sense to wait and look at this project in conjunction with the International Dark Sky Discovery Center. Goodwin said without a construction timeline for the IDSDC, it would be difficult to plan.

Magazine said there are other priorities in his mind such as streets.

“I know $235,000 won’t fill many potholes, but at some point we need to draw a line in the sand somewhere,” Magazine said. “I’m drawing that line here.”

Funding plan

The General Fund makes up the operating budget for Town departments. That funding in the proposed budget breaks down like this:

*Mayor and Council - $78,779.

*Administration - $2,672,360.

*Administrative services - $323,269.

*General Government - $3,626,800.

*Court - $422,053.

*Public Works - $1,497,800.

*Development Services - $1,359,678.

*Community Services - $3,695,572.

*Fire - $4,457,834.

*Law enforcement (MCSO contract) - $5,456,036.

The detailed proposed budget plan is posted to the Town website at this time for public review, fountainhillsaz.gov/budget.