City OKs final budget of nearly $225M

Plan requires tax hike, members cite pay raise promises

With a 5-2 vote on Wednesday, the Yuma City Council adopted a final budget of $224.7 million, which includes a Capital Improvement Program budget of $42 million and an operating budget of nearly $183 million.

Mayor Doug Nicholls, Deputy Mayor Gary Knight and council members Mike Shelton, Edward Thomas and Karen Watts voted to adopt the budget. Council members Leslie McClendon and Jacob Miller voted against it.

The final budget calls for an increase in the primary property tax rate from the 2018-2019 rate of $2.2747 to a proposed $2.3185 on each $100 of assessed valuation. The primary property tax levy is anticipated to raise more than $13.7 million in tax revenue.

Several council members noted that they were voting to adopt the budget and consequently the higher property tax rate because of a shortfall primarily caused by a pay hike for public safety personnel as well as other employees.

The city also introduced an ordinance that will set the 2019-2020 primary property and mall maintenance district property tax levies. This ordinance is up for adoption in August.

The proposed tax rate for the Mall Maintenance District is $4.7398 on each $100 of assessed valuation, which is slightly higher than the 2018-2019 tax rate of $4.6718. The levy is anticipated to raise about $120,000 in tax revenues for 2019-2020.

Before adopting the budget, the city also held a combined Truth in Taxation and budget hearing. State law requires cities to notify taxpayers and hold a hearing when the amount of primary property taxes to be collected will increase from one year to the next.

The hearing drew four speakers. Phil Clark noted that a few years back, when the city was looking to raise water rates, citizens suggested that before increasing rates, officials should take a look at how they’re handling the city’s

resources. He questioned funds related to the riverfront development and San Carlos Hotel.

Gary Wright shared “good news” about increasing property values in Yuma and an expanding tax base due to new construction. He then asked why residential and commercial property owners should have their tax rates increased to cover salary hikes and shortcomings in the budget. He suggested the council look for additional cuts so the city can maintain the current tax levy rather than raise the tax rate. After restoring the taxpayers’ confidence, Wright added, citizens might pass a sales tax increase to improve roads.

Donna White asked the council members to protect the people by stopping the exodus of first responders and improve roads, which she said have become embarrassing due to their condition.

Frank Bergwall objected to the tax rate increase, noting that retirees and other citizens may not be able to afford it.

After the hearing, the council members explained their reasons for the way they would be voting. Shelton first clarified comments he made during a Tuesday work session in which he called for the visitors bureau to do more to attract tourists to the city. He said that the agency’s executive director had cleared some of his misconceptions and had found that the agency is doing “quite a bit” and “working hard” to increase tourism. He explained that he had made the comments in the context of trying to find funds for the budget without increasing taxes.

Shelton then noted that staff had already cut $4 million from the budget, and the recommended fund balance still had a $450,000 shortfall. At the root of the shortfall, he said, is the promised salary increase for public safety personnel.

Nicholls pointed out that besides the public safety salaries, the city had to come up with funds to pay half of the promised raises for other employees to keep salaries competitive and next year the city will still need to make up the other half. In addition, he said, the city is grappling with minimum wage adjustments.

“A vote against this budget is a vote against public safety,” Thomas said. He noted that the tax increase would be about $9 per year for a $200,000 home, which is about the cost of two Starbucks grande coffees. He took exception to those who say the council is not using taxpayer money wisely. Rather, he said, the cycle of training new police officers, then having them leave for better pay elsewhere and having to train new recruits is not a wise use of taxpayer money. Without this tax increase, he added, it would be nearly impossible to keep officers here and the government would be derelict in its duty to protect citizens.

Thomas also pointed to a “missed opportunity” for increasing the sales tax rate, which has been rejected by voters. He noted that sales taxes are paid by everybody, including winter visitors; as it stands, a small group of property owners pay 100 percent for services everyone gets to use. “Is this fair?” he asked.

McClendon said she disagreed with Thomas. She explained that she supports public safety but would be voting against the budget because she felt the city could have made more cuts and “knocked down” the fund balance, which the city typically keeps at 20 percent. She noted that when a household has a budget shortfall, members of that household “trim” and “cut out special things” that they might want but they can’t have right now.

Miller was brief in his comments, noting that he has already expressed his views. He said he has extensively studied the budget and believes a property tax increase is not needed.

For Nicholls, it came down to making sure the city keeps its promises to employees. “I really didn’t want to be here tonight looking at a property tax increase,” he said.

Not having a good fund balance is not fiscally wise, Nicholls noted.

Going into next year, he added, the city should look for new revenue sources and consider all ideas and opportunities.