Carefree Truth
Issue #585, August, 2017
Mayor Les Peterson began by introducing the members of the Long Range Financial Planning Committee (LRFPC). It included Council members Mayor Peterson, Vice Mayor John Crane, and Councilman Mike Krahe; Town staff members Gary Neiss and Jim Keen; and residents Stephen Hatcher, Gary Hayward, Leslie Hine, John Traynor, and Jerry Wetta. The Long Range Financial Plan (LRFP) contains suggestions for strategic planning over the next 3-5 years.
The Mayor explained that Carefree is in the midst of a transition to a new financial reality as a result of state legislative changes which will adversely impact the Town's future revenues. Without changes in the Town's business model, a future structural deficit (expenditures exceeding revenues) will occur. Under the assumption that residents do not support a local property tax, the only incremental revenue generating avenue available is stabilizing, and then increasing, revenues from municipal sales tax.
Based on the US Census, Carefree's population has increased 23%, from 2,927 in 2000 to 3,610 in 2015, the last available figures. During the same time period, the number of homes has increased 53%, from 1,769 to 2,706. The projected build out, based on the Town's General Plan, is population 6,000 and homes 4,400.
Issue #585, August, 2017
Mayor Les Peterson began by introducing the members of the Long Range Financial Planning Committee (LRFPC). It included Council members Mayor Peterson, Vice Mayor John Crane, and Councilman Mike Krahe; Town staff members Gary Neiss and Jim Keen; and residents Stephen Hatcher, Gary Hayward, Leslie Hine, John Traynor, and Jerry Wetta. The Long Range Financial Plan (LRFP) contains suggestions for strategic planning over the next 3-5 years.
The Mayor explained that Carefree is in the midst of a transition to a new financial reality as a result of state legislative changes which will adversely impact the Town's future revenues. Without changes in the Town's business model, a future structural deficit (expenditures exceeding revenues) will occur. Under the assumption that residents do not support a local property tax, the only incremental revenue generating avenue available is stabilizing, and then increasing, revenues from municipal sales tax.
Based on the US Census, Carefree's population has increased 23%, from 2,927 in 2000 to 3,610 in 2015, the last available figures. During the same time period, the number of homes has increased 53%, from 1,769 to 2,706. The projected build out, based on the Town's General Plan, is population 6,000 and homes 4,400.
The primary municipal revenue sources are sales tax, State shared revenue, and local property tax. In 2007, sales tax generated $4,019,000 and State shared revenue provided $833,000. In 2016, sales tax generated $3,709,000 and State shared revenue provided $761,000. Carefree does not assess a local property tax.
Key contributors to Carefree's sales tax revenues include construction, retail, accommodations/rentals, restaurants/bars, and development impact fees. In 2007, construction generated $1,166,000. Retail generated $608,000. Accommodations/rentals generated $1,028,000. Restaurants/bars generated $233,000. And development impact fees generated $453,000. In 2015, Construction provided $633,000. Retail generated $1,126,000. Accommodations/rentals generated $756,000. Restaurants/bars generated $133,000. , Development impact fees were created so development would pay for itself by funding the associated infrastructure. Due to a change in the state law which went into effect in 2008, the Town can no longer collect development impact fees because Carefree's infrastructure is already in place. Significant future declines are anticipated in construction revenues. Retail, accommodations/rentals and restaurant/bars are areas of potential growth. Recent and proposed legislative changes have and will adversely impact future construction sales tax revenue.
In 2007, Administration expenditures were $1,287,000; in 2016, they were $1,093,000. (Administration is a broadly combined category which includes, but is not limited to, capital assets, loans, town facilities, and salaries/benefits. The Town of Carefree has 13 full time employees. The comparable community of Cave Creek, with 26 full time employees working only 4 days per week, pays approximately $1,300,000 more in salaries/benefits. Town of Carefree staff members tend to perform multiple tasks.) Planning/Building in 2007 cost $1,287,000; in 2016 it cost $1,093,000. This was due to the decrease in construction, necessitating less staff. Public Works cost $1463,000 in 2007; in 2016 it cost $968,000. Public Safety cost $2,446,000 in 2007; in 2016 it cost $1,890,000. No marketing was done until 2010. In 2016, Marketing cost $213,000.
When Rural/Metro (R/M) reorganized, service to Scottsdale was eliminated, and they were considering pulling out of Carefree too. To ensure uninterrupted emergency services, in 2007 the Town built the fire station and purchased a fully equipped fire truck, both of which were paid off in full in 2012. A Request for Proposals (RFP) was put out to service providers for staffing of the Carefree Fire Department. Phoenix was not interested. Daisy Mountain and Scottsdale responded with bids that were more than twice the cost of R/M's proposal. Recently, R/M agreed to pay for leasing of ambulance space and cost recovery for the use of Carefree's equipment when responding to non-subscribers outside of the Town boundaries. This helps offset inflationary increases built into the annual contract.
The annual Master Contract this year, covering all residences and businesses, costs the Town approximately $1.4 million, and costs the citizens and businesses nothing. Before the town-wide contract was enacted, the average private subscription cost was $800-1,000 per residence. This was not tax deductible. Some insurance providers discount for master contracts vs. subscription, due to reduction in community risk (improved ISO ratings), and additional savings to residents and businesses.
"Carefree needs to consider diversification of its municipal sales tax base, the only significant revenue stream that it can influence, in order to maintain the current services without assessing a property tax. Carefree has a nimble organization, therefore significant savings could not be yielded without eliminating beneficial services such as the master fire contract. In order to achieve this diversification, Carefree needs to evaluate the highest and best land uses for a handful of remaining undeveloped properties."
The land use presentation section will be covered in Carefree Truth Council/P&Z Joint Workshop, pt. 2. In the videos below, you can see all the slides written about above and hear the comments as the meeting progressed.
https://vimeo.com/229802619
https://vimeo.com/229863814
Lyn Hitchon
Prepared by Carefree Truth
Visit our website at www.carefreetruth2.com If you know anyone who would like to be added to the Carefree Truth email list, please have them contact me. Feel free to share Carefree Truth with others on your list.
Visit www.carefreeazbusinesses.com to see more info about businesses in Carefree. Please support our merchants.
Key contributors to Carefree's sales tax revenues include construction, retail, accommodations/rentals, restaurants/bars, and development impact fees. In 2007, construction generated $1,166,000. Retail generated $608,000. Accommodations/rentals generated $1,028,000. Restaurants/bars generated $233,000. And development impact fees generated $453,000. In 2015, Construction provided $633,000. Retail generated $1,126,000. Accommodations/rentals generated $756,000. Restaurants/bars generated $133,000. , Development impact fees were created so development would pay for itself by funding the associated infrastructure. Due to a change in the state law which went into effect in 2008, the Town can no longer collect development impact fees because Carefree's infrastructure is already in place. Significant future declines are anticipated in construction revenues. Retail, accommodations/rentals and restaurant/bars are areas of potential growth. Recent and proposed legislative changes have and will adversely impact future construction sales tax revenue.
In 2007, Administration expenditures were $1,287,000; in 2016, they were $1,093,000. (Administration is a broadly combined category which includes, but is not limited to, capital assets, loans, town facilities, and salaries/benefits. The Town of Carefree has 13 full time employees. The comparable community of Cave Creek, with 26 full time employees working only 4 days per week, pays approximately $1,300,000 more in salaries/benefits. Town of Carefree staff members tend to perform multiple tasks.) Planning/Building in 2007 cost $1,287,000; in 2016 it cost $1,093,000. This was due to the decrease in construction, necessitating less staff. Public Works cost $1463,000 in 2007; in 2016 it cost $968,000. Public Safety cost $2,446,000 in 2007; in 2016 it cost $1,890,000. No marketing was done until 2010. In 2016, Marketing cost $213,000.
When Rural/Metro (R/M) reorganized, service to Scottsdale was eliminated, and they were considering pulling out of Carefree too. To ensure uninterrupted emergency services, in 2007 the Town built the fire station and purchased a fully equipped fire truck, both of which were paid off in full in 2012. A Request for Proposals (RFP) was put out to service providers for staffing of the Carefree Fire Department. Phoenix was not interested. Daisy Mountain and Scottsdale responded with bids that were more than twice the cost of R/M's proposal. Recently, R/M agreed to pay for leasing of ambulance space and cost recovery for the use of Carefree's equipment when responding to non-subscribers outside of the Town boundaries. This helps offset inflationary increases built into the annual contract.
The annual Master Contract this year, covering all residences and businesses, costs the Town approximately $1.4 million, and costs the citizens and businesses nothing. Before the town-wide contract was enacted, the average private subscription cost was $800-1,000 per residence. This was not tax deductible. Some insurance providers discount for master contracts vs. subscription, due to reduction in community risk (improved ISO ratings), and additional savings to residents and businesses.
"Carefree needs to consider diversification of its municipal sales tax base, the only significant revenue stream that it can influence, in order to maintain the current services without assessing a property tax. Carefree has a nimble organization, therefore significant savings could not be yielded without eliminating beneficial services such as the master fire contract. In order to achieve this diversification, Carefree needs to evaluate the highest and best land uses for a handful of remaining undeveloped properties."
The land use presentation section will be covered in Carefree Truth Council/P&Z Joint Workshop, pt. 2. In the videos below, you can see all the slides written about above and hear the comments as the meeting progressed.
https://vimeo.com/229802619
https://vimeo.com/229863814
Lyn Hitchon
Prepared by Carefree Truth
Visit our website at www.carefreetruth2.com If you know anyone who would like to be added to the Carefree Truth email list, please have them contact me. Feel free to share Carefree Truth with others on your list.
Visit www.carefreeazbusinesses.com to see more info about businesses in Carefree. Please support our merchants.