Yuma’s draft budget mostly flat

No increase on tap for property tax rate, road issues linger

Yuma’s draft 2018-19 budget is mostly flat and does not call for an increase in the property tax rate, although the collection will be larger due to growth.

Staff presented the budget to the city council on Tuesday in the first of several work sessions that officials plan to have to review the budget.

The total draft budget is for $219.7 million and consists of an operating budget of $179.1 million, up from 1.7 percent from last year, and a capital improvement project of $40.6 million, which is an increase of 5 percent from FY 2017-18.

Due to an increase in property values, staff is recommending that the city keep the property tax rate at the Truth in Taxation rate of $2.2747, meaning that on average taxpayers will not see a tax increase for 2019.

Mayor Doug Nicholls noted that the budget is “not an easy document” and described it as “arduous to get through.” He pointed out that staff did a great job in maintaining costs.

The priorities continue to be the police, fire and parks departments, according to City Administrator Greg Wilkinson. Major issues impacting the budget are the Highway Users Revenue Fund and roads, Public Safety Personnel Retirement System, minimum wage increases and education, which might lead to more state funding sweeps.

The draft budget shows a 2.3 percent increase in local revenue, however, that is offset by a 1 percent decrease in state shared revenues.

HURF is staying flat as there will be no restoration of swept funds, Wilkinson said. The city is waiting on the outcome of a bill proposing a new sweep, which would mean the loss of another $100,000.

Other factors include a minimum wage increase of 5 percent and cost increases of about 2-4 percent. The city plans to save money by delaying hiring and purchases.

Roads continue to be a challenge, although the Capital Improvement Program has $14 million budgeted for road improvements for this year. However, the annual amount will drop to $3.7 million per year starting in 2020. The city needs between $8-9 million a year to maintain roads in the condition they are; otherwise, it will lose the roads. The city needs at least $13 million per year to improve the condition of roads.

Wilkinson noted that the city has four years to fix the funding or it will cost $460 million to reconstruct the entire roadway network. The city will need to “change the way it’s been doing things” and go to a “mill and fill” method, which means taking off the top two inches and repaving them.

It also means stopping

maintenance of roads with a pavement condition index of 60 or less, which include 140 miles of roads. The city would then concentrate on the roads it can save, those with a PCI of more than 60.

Councilwoman Leslie McClendon said she was “not thrilled” to hear that the city will just “let roads go,” noting that business, not just residents, will suffer. Wilkinson said that a lack of funds means the city will have to follow the county’s lead and start posting “primitive road” signs.

“There’s nobody here that likes the solution,” he said.

The Public Safety Personnel Retirement System also continues to be a challenge for the city. In 2018, the unfunded liability is at $54 million for the fire department and $62 million for the police department.

Deputy Mayor Gary Knight asked whether Yuma should follow what other cities are doing and pay a lump sum at the beginning of the fiscal year to help bring down the amount.

Chief Financial Officer Pat Wicks, who reviewed the budget page by page, noted that the PSPRS unfunded liability continues to increase as the system generates more benefits than the city can pay.

“Until those benefits are reduced in some fashion, we will never reach the top. If we tried to pay off now, it would cripple us,” he said. “We need to put aside the idea of paying large lump

sums and continue to work with the Legislature to make sure the system is funding affordable sustainable benefits. At this time, it’s not.”

Wilkinson pointed out budget restrictions, including $3.4 million that was cut from the budgets submitted by departments, $1.2 million of which he considers critical needs. The vehicle fleet is being reduced and the city is looking at leasing vs. purchasing vehicles.