Scottsdale budget talks hinge upon uncertain variables as virus impacts remain fluid

Thompson issues memo alerting staff to proactive measures

City Manager Jim Thompson will be presenting the fiscal year 2020-21 budget on Tuesday, April 7.
City Manager Jim Thompson will be presenting the fiscal year 2020-21 budget on Tuesday, April 7.
(Independent Newsmedia/Arianna Grainey)
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Scottsdale City Council will be taking a first blush look at next year’s budget during its Tuesday, April 7 meeting, while facing myriad economic unknowns as COVID-19 continues to effect commerce across the nation.

In preparation for the April 7 budget discussion, Scottsdale City Manager Jim Thompson announced in a message to staff that market and performance salary adjustments for employees would be delayed.

“Uncertainty is a fact of life for the moment. Under normal circumstances our budget proposal is based upon a solid projection of revenues for the next year. This is not the case this year. We know the negative financial impact of COVID-19 will be substantial,” Mr. Thompson stated, pointing out the unfortunate timing of Scottsdale’s peak season being hit by the virus.

“Recognizing this fact, I made the difficult decision to delay consideration of proposed market and performance salary adjustments for employees for the time being. That’s not to say our employees do not deserve modest financial rewards for continuing to do such excellent work under incredible circumstances --- you do. But there are too many unknowns to have that discussion now. In case the economy improves, we have added placeholder funds in the budget to continue these pay programs.”

Mr. Thompson states he hopes to be able to bring back the topic of pay increases to City Council for consideration later in the fiscal year.

Fiscal year 2020-21 begins on July 1, and the proposed budget exceeds $1.5 billion, with an operating budget of $610.3 million.

The operating budget is comprised of:

  • General Fund: $296.1 million
  • Special revenue: $55.5 million
  • Debt service: $122.8 million
  • Enterprise: $123.6 million
  • Internal service: $12.3 million.

In a city staff report sent to council accompanying the budget, Mr. Thompson says this year is an anomaly.

“This year is unlike any other in memory,” Mr. Thompson said. “Staff had completed submitting budget requests, the internal review and evaluation process was finished, this proposed budget was prepared for City Council review --- then COVID-19 hit. Uncertainty is a fact of life in our current environment. Given that, this proposed budget is provided to begin our deliberations and set the maximum expenditure limitation.”

Mr. Thompson says the city has already begun curtailing some expenditures and placed hiring for non-public safety positions on hold.

“We simply do not know how the changing world and its economy will impact us. It will likely be substantial, but not insurmountable,” he said in his report to council.

A fire fighter’s support

Scottsdale Fire Fighters Association President Sasha Weller, one of the thousands of municipal employees who will not be getting a pay increase at this time, says he supports the city manager’s choices.

“I think most people have to expect that’s the case,” Mr. Weller said of Mr. Thompson’s memo.

“Our economy being more than 30% based on tourism, when spring training shuts down and the month of March is our biggest month for tourism --- and the anchor of that really is spring training --- that’s to be expected. The reality of it is there are tons and tons of businesses hurting.”

Mr. Weller says right now, it’s important for everyone to do their part in sustaining the economy as best as possible.

“No one wants to see that they’re not going to get money, I get that, but right now it’s rational. It’s probably what needs to happen,” he said.

Additionally, it’s important for Scottsdale’s tax base to remain strong, Mr. Weller said, as the local fire department relies on it.

“It is absolutely vital that our tax base remains as strong as it possibly can. The reality of it, for us, people going to get take out food or buying dinners, buying from a local business, it is really important because that keeps fire trucks on the road,” he explained. “The bulk of our fire department is funded through sales tax.”

Mr. Weller says in the end, the fire fighters association supports the greater mission at-hand. Last week, they made a donation of $2,500 to Scottsdale Community Partners. Mr. Weller says donations will be coming as they are in the process of identifying Scottsdale-based organizations in-need.

“At the end of the day, fire fighters, and I think all first responders, their mission is about service,” he said. “Like all sworn members of public safety, fire fighters and police officers, you swear an oath to put yourself in harms way to protect our community.”

Budget details

The General Fund sources are estimated to increase $600,000 from the forecasted fiscal year 2019-20 budget, coming from an increase in state shared revenue, additional primary property tax collections and property rental revenue.

The secondary property tax levy will increase $400,000 next fiscal year to $33.4 million, as a net result of paying off prior general obligation debt, Mr. Thompson said.

“Despite the small increase to the levy, the secondary rate will decrease from .53214 to .5043 due to expected increases in property values,” he said in his report to council.

Overall, the proposed operation budget for next fiscal year increases General Fund spending by $5.3 million to address increase costs and priority programs.

The proposed budget also includes an additional $1.2 million in the General Fund to cover the city’s share of an anticipated 5.8% increase in employee medical costs and $800,000 for the vacation trade program, which allows employees to trade-in earned vacation hours they do not intend to take.

Other General Fund expenses include:

  • $1.6 million to cover the greater costs in custodial contracts throughout the city as more locations are requiring services;
  • $1 million of one-time funding for fleet upgrades to three aging fire trucks; and
  • $300,000 for 2020 General Election costs.

Additionally, closing Palomino Library will save the General Fund nearly $600,000 by reducing staff and eliminating associated operating expenses. An additional $300,000 annual reduction comes from reduced material costs as the library winnows its DVD collection, Mr. Thompson stated.

In June, Palomino Library will transition into a school library.

Also during the April 7 Scottsdale City Council meeting is a consideration to abolish late fines at all of Scottsdale Public Library’s locations. In fiscal year 2018-19, the library collected $161,363 in fine revenue.

City Council’s meeting will begin at 5 p.m., April 7. Until further notice, council meetings will be held electronically, and can be viewed on Cox Cable Channel 11 or online at ScottsdaleAZ.gov.

Written comments may be submitted electronically at least one hour prior to the meeting.

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