Council to share revenue with Visit Yuma
City to receive $11.3 million in coronavirus relief funds
Yuma has agreed to share revenue with Visit Yuma if the 2% hospitality tax collection is better than expected. The move comes after some council members expressed concerns with taking funding away from the agency that is supposed to bring in tourists, thereby increasing revenue for the city.
The City Council discussed and adopted on Wednesday the 2020-2021 proposed preliminary budget in the amount of $249.3 million, which includes a Capital Improvement Program of $51.4 million; an operating expenditure budget of $185.7 million; interfund transfers of $12 million; and wastewater interfund borrowing of $193,068.
After Councilwoman Leslie McClendon recused herself because she works for Visit Yuma, City Administrator Phil Rodriguez acknowledged the council’s concerns with potential negative impacts that reducing the visitors bureau’s funding might have on the city’s budget. The budget for the bureau has been cut from $600,000 to $450,000.
Rodriguez said he spoke with Linda Morgan, the bureau’s executive director, who said that the reduction would primarily impact Visit Yuma’s ability to market activities related to city facilities, such as the Pacific Avenue Athletic Complex.
Consequently, Rodriguez recommended the sharing revenue from the hospitality tax up to 25%, or $22,024, if the tax fund exceeds projected revenues.
Councilman Chris Morris, one of the members who raised concerns, said he liked the idea because the city would not have an additional expenditure and would only reward the agency if additional funding is available.
Councilman Gary Knight also supported the idea because it’s incentive driven. The council unanimously agreed to the proposal.
For consideration of the CIP budget, Mayor Doug Nicholls recused himself because his engineering firm will be working on some of the listed projects. The council unanimously OK’d the budget with no further discussion.
As for the remainder of the preliminary budget, Rodriguez said it is balanced and reflects reduced spend
ing in every department and fund. The city is looking at a spending decrease of $11.2 million across all funds, excluding grants, in response to the COVID-19 crisis.
Nevertheless, Rodriguez called the budget a “very solid footing” in the plan for recovery.
Knight asked if the budget included the city’s portion of the coronavirus relief and recovery dollars for local Arizona governments and nonprofits from the Governor’s Office. Yuma has been allocated $11.3 million.
Rodriguez noted that the budget did not include the relief funds because although they’re anticipated, they’re not here yet and they’re likely to come later this summer. He suggested setting the funds aside until the city better understands the consequences of the pandemic. Until then, the funds can be “banked” in the grant contingency fund.
The city administrator also noted that an internal group will be tasked with recommending how best to use the relief funds.
Rodriguez stressed that a portion of the $11.3 million will need to be used to cover revenue shortfall. Staff will be looking at the general fund specifically, from which public safety is funded, he said.
Two citizens asked to address the budget. Gary Wright, a former councilman, asked why water funds were going toward the Greater Yuma Economic Development Corp. Deputy Administrator Jay Simonton explained that GYEDC brings in large manufacturers, such as Almark, one of the city’s largest water customers.
Wright also questioned an upcoming Truth in Taxation hearing, which state law requires anytime the total tax levy increases. He noted that everyone is struggling and business revenues had also decreased and asked the council to reduce or not to raise property taxes.
Yuma’s property tax rate for 2020-2021 remains unchanged at $2.3185 per $100 of assessed valuation, but still requires the Truth in Taxation hearing if the total tax collection increases, which could happen if the assessed valuation increases. The city seeks an expanded tax levy for FY 2021 only attributable to new construction, while maintaining the current rate of $2.3185.
Business owner Miguel Miranda said he’s “very worried” about businesses in Yuma. He mentioned increasing crime activity and outnumbered cops and suggested increasing officers and salaries.
Nicholls noted that the council priorities are roads and public safety. “I think we’re moving forward in that direction,” he said.
The council unanimously voted to adopt the preliminary budget.
On June 17, at 5:30 p.m., the city will hold the public hearing and introduce an ordinance on the tax levy increase. On July 15, the council will consider the final request to adopt the tax levy.