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Town of Queen Creek sets $409M General Fund budget as COVID-19 fiscal impacts remain fluid

Posted 5/31/20

The Town of Queen Creek’s expenditure budget for fiscal year 2020-21 is $409.1 million, with water, sewer and solid waste; transportation; capital improvement projects; fire, medical and public …

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Town of Queen Creek sets $409M General Fund budget as COVID-19 fiscal impacts remain fluid

Posted

The Town of Queen Creek’s expenditure budget for fiscal year 2020-21 is $409.1 million, with water, sewer and solid waste; transportation; capital improvement projects; fire, medical and public safety; and general government the top-funded areas.

Federal and state decisions to limit the spread of COVID-19 will have wide-ranging impacts on revenue for the town, officials said.

Consumption tax --- or sales tax --- revenues have been reduced from retail, food services, entertainment and tourism, Town Manager John Kross said recently.

“We’re trying to figure out, like everybody else is, what sort of recovery is ultimately going to take shape here?” he said.

The fiscal year 2019-20 revised budget shows $3.6 million in revenue from restaurant and bars, with half that amount --- $1.8 million --- projected for 2020-21. Also expected to be reduced, according to town documents, are:

  • Construction sales tax: $8.9 million received last year, reduced to $4.7 million for 2020-21 --- a 45% change.
  • Retail taxes: $16 million in revenue last year, reduced to $12 million for 2020-21 --- a 25% change.

“Our sense is that we put our budget together to try to be as conservative as possible,” Mr. Kross said. “We think there are some really deep implications in certain sectors of the economy that will impact the town’s budget for at least a year, maybe even two years, and it may even take a little bit after that for certain segments.”

The tentative 2020-21 budget is to be presented to the Town Council for approval at the June 3 meeting, the final budget adoption is slated for June 17 and the property-tax levy is to be adopted July 15. Council meetings begin at 6:30 p.m. and are held in the Queen Creek Community Chambers, 20727 E. Civic Parkway. Meetings are to be shown live-streamed at video.ibm.com/councilmeeting.

COVID-19 and the budget

Because of COVID-19’s impact on the Town of Queen Creek, the budget had to be redone in a 30-day time period, Mr. Kross said at the May 11 meeting of the Town’s Council’s Budget Committee.

“This pandemic has really upended a lot of organizations, ours included,” he said.

Guiding principles in redoing the budget included not using $16.7 million in reserves to mitigate revenue reductions, preserving the funds for use later if the situation warrants it. The budget also reflects the Town Council’s priorities for public safety --- including creating a Police Department and building two new fire stations; and continuing with the $286 million 10-year transportation plan, he said.

An additional $3 million to $4 million could be set aside after year-end expenses for a new reserve fund to mitigate revenue losses, Queen Creek Finance Director Scott McCarty said to the committee.

“One of the things that’s really come to light over the last six, seven weeks as we’ve tried to deal with the whole COVID situation is introduce the concept of creating a COVID-19 reserve,” he said.

Budget Committee Chair Dawn Oliphant commended the town manager and his staff for having a budget ready and then revising it due to the recent COVID-19 closures of businesses.

“To have a complete budget put together and then have the things happen that happened in the last couple of months and have to go back and literally kind of redo the budget is a lot of work, so I know my committee, we would just like to thank you so much of not only doing the budget once but doing the budget twice for us today. So we really do appreciate all of your hard work,” she said.

Budget Committee members Ms. Oliphant and Vice Mayor Julia Wheatley voted to recommend that the town manager’s 2020-21 budget for $409.1 million be approved by the full council.

2020-21 budget

Funding sources for 2020-21, according to the draft budget, include:

  • 2.25% sales tax, of which 2% is dedicated to the general fund and .25% to the emergency services fund.
  • .25% from transactions from major retail developments in the Town Center district, which is dedicated to the Town Center fund.
  • 2% construction or contracting sales tax collected for the capital improvement program.
  • Property tax of $1.95 per $100 of assessed limited property value, for public safety uses.
  • Development impact fees collected with each building permit; capacity fees, which are one-time charges for utility infrastructure.
  • Building revenue.
  • Solid-waste utility fees.
  • State-shared revenue --- Arizona distributes a portion of state income tax, sales taxes, highway user revenue funds and vehicle license tax to municipalities based on population.

The planned expenditures of the top five areas funded for fiscal year 2020-21 are:

  • $184,243,521 for water, sewer and solid waste, which includes a goal of securing the best opportunity for the 5.5 square miles of state lands and including them in the town’s planning area.
  • $110,626,550 for public works and transportation, which includes coordination with the Arizona Department of Transportation and the City of Mesa for the construction of State Route 24 including an overpass at Ellsworth Road.
  • $34,784,402 for general capital improvement projects and development, which includes design and construction to widen Ocotillo Road to two lanes in each direction from Sossaman to Hawes; and a project with Pinal County to design and construct an improved half street to extend Meridian Road north from Germann Road to the new State Route 24.
  • $28,095,396 for fire, medical and public safety, which includes recruiting, hiring and training 15 new firefighters to staff the temporary Fire Station No. 5; hiring a police chief for a new Queen Creek Police Department and then beginning an 18-month transition process that will include hiring two lieutenants and one senior administrative assistant; and continuing the contract with Maricopa County Sheriff’s Office for law-enforcement services.
  • $15,881,992 for general government.

Previous budget years

In the 2019-20 approved budget of $452,718,918, the expenditures of the top five areas funded were:

  • $192,856,520 for water.
  • $121,883,321 for drainage and transportation.
  • $43,200,256 for wastewater/sewer.
  • $27,051,480 for the general fund.
  • $20,208,170 for emergency services.

In the 2018-19 revised budget of $350,905,666, the expenditures of the top five areas funded were:

  • $146,649,118 for water.
  • $77,132,048 for drainage and transportation.
  • $36,952,576 for wastewater/sewer.
  • $18,211,736 for emergency services.
  • $8,875,007 for parks and open-space recreation, providing programs and classes for all ages and interests; with parks, trails and open space.

In the 2017-18 actual budget of $148,373,506, the expenditures of the top five areas funded were:

  • $29,957,727 for water.
  • $28,828,843 for drainage and transportation.
  • $14,888,657 for emergency services,
  • $13,328,644 for parks and open-space recreation.
  • $12,294,101 for wastewater/sewer.