"Thomas Jefferson said a democracy is dependent on an informed citizenry. I don't care whether it sounds corny or not. It's the truth." -Jim Lehrer
Carefree Truth
Issue #971, December 13, 2021
Issue #971, December 13, 2021
Gary Neiss gave a preamble before passing the floor over to Steve Prokopek. He explained that he has been with Carefree for 20 years. He wrote a General Plan, Zoning Ordinances, Subdivision Ordinances, Design Guidelines, the Mountainside Ordinances, and many budget documents, including the past one. So he knows about the Town of Carefree. In addition, he spent many years with the City of Scottsdale, and understands the origin of Carefree. He comes with a significant background about what Carefree is and what Carefree was.
Carefree has always been, and continues to be, a conservatively managed community. Carefree provides core municipal services in the most cost effective manner. The annual Town budget outlines in detail the cost to provide services and the cost to support these core services. He encouraged every resident attending the meeting online to review the budget document from last year. It went to a program based budget that includes an extensive narrative of how Town funds are invested. In the past, it was just a line item budget. It now provides the details behind the numbers, and how the funds received on an annual basis are expended.
It is an important document to understand. It outlines many of the conversation points to be discussed at this meeting about economic development. The budget can be found on the Town website at www.carefree.org under Budget & Finance, or you can email Mr. Neiss at gary@carefree.org to request a pdf copy. Carefree also has an Open Door policy, so come in and ask questions. Mr. Neiss said he is always available to meet with residents.
One of the indelible imprints is the importance of local sales tax to support the Town provided services. In other communities there is typically a local property tax to help support the fixed costs of operations and/or the variable costs of capital investments. Carefree continues to rely on sales tax revenue. Similar to an investment portfolio, it is important to seek balance to insulate the portfolio from negative cycles. In the case of Carefree, over the past financially audited 10 fiscal years, the average sales tax revenue has been around $3 million.
Carefree has always been, and continues to be, a conservatively managed community. Carefree provides core municipal services in the most cost effective manner. The annual Town budget outlines in detail the cost to provide services and the cost to support these core services. He encouraged every resident attending the meeting online to review the budget document from last year. It went to a program based budget that includes an extensive narrative of how Town funds are invested. In the past, it was just a line item budget. It now provides the details behind the numbers, and how the funds received on an annual basis are expended.
It is an important document to understand. It outlines many of the conversation points to be discussed at this meeting about economic development. The budget can be found on the Town website at www.carefree.org under Budget & Finance, or you can email Mr. Neiss at gary@carefree.org to request a pdf copy. Carefree also has an Open Door policy, so come in and ask questions. Mr. Neiss said he is always available to meet with residents.
One of the indelible imprints is the importance of local sales tax to support the Town provided services. In other communities there is typically a local property tax to help support the fixed costs of operations and/or the variable costs of capital investments. Carefree continues to rely on sales tax revenue. Similar to an investment portfolio, it is important to seek balance to insulate the portfolio from negative cycles. In the case of Carefree, over the past financially audited 10 fiscal years, the average sales tax revenue has been around $3 million.
The slide shows the evolving sales tax dollars and you can see the various cycles within the economy, starting with the Great Recession. We are now in the Covid years. Carefree is very lucky to have hardware and grocery stores that people sought out during the pandemic, so sales tax revenue has been up as a result. Carefree must consider the evolution of sales tax, anticipate cycles, and balance the expenditures over the course of the fiscal year.
Mr. Neiss noted that he often uses the example of a stool when referencing how the weight is balanced to pay for core services. Most "stools" have 3 legs; local property tax, sales tax, and State Shared Revenue which is a smaller portion of the overall revenue. Carefree's "stool" has only 2 legs. That's why Carefree is a nimble organization with only 16 staff members. He is so proud of Carefree's staff that is dedicated to serving this community, and has done so over the course of many, many years. Carefree has one of the smallest staffs in the state of Arizona. He said we should all be proud of the core municipal services provided by this staff.
The pie chart in the slide illustrates contributors to the sales tax revenue over the past 10 fiscal years. The piece of the pie that reads "Construction" constitutes 1/5 of the revenue. Construction sales tax revenue is a one time revenue, here today, gone tomorrow. Construction projects pay 3% of the contract in sales tax. The community is reaching build-out. There are not that many more properties to be developed. For the most part, Carefree is a residential community, and that will not change.
The biggest sales tax contributor over the past 10 years, approximately 35%, is retail, the piece at the bottom of the pie. The largest contributors are the big box stores. The local grocery store has been purchased by a grocer in California, and no one knows that grocer's plan. CVS is looking at closing and consolidating approximately 900 stores, which could have an impact on Carefree. These decisions are made in the private sector. It is the Town's fiduciary responsibility to consider and evaluate trends that will impact Carefree.
About 20% is attributed to restaurants and hospitality uses. Tourism is typically one of the largest drivers of the region and state economy, which is why the economic development initiative speaks of improving the town's hospitality position within the marketplace by finding complimenting pieces. The Town is not trying to change the fabric of who we are, but to compliment who we are.
Economic development is about building value. Carefree's original economy was designed to bring visitors into the community by flying them into the Sky Ranch airport, having them enjoy a stay at the Carefree Resort, perhaps playing a round of golf at the Desert Forrest golf course, providing nearby shopping at the small businesses that anchor the Town Center, and perhaps selling them a lot. As the town has matured, some of these uses were privatized, such as the airport and the golf course. The golf course had a reciprocal agreement with the Resort so they could provide a golfing experience to their guests who they were trying to attract and move out here.
Additionally, the public streets and supporting infrastructure were expanded, which all contributed to the cost to operate the town. Today, as the community reaches build-out, the cost to maintain the aging assets and address additional services requested by the next generation of Carefree residents continues to rise. With expanded costs to the Town, it's placed in a fiduciary role to look at opportunities to diversify its small tax producing portfolio and find complimenting pieces.
It is important to know that the the die has already been cast to the fabric of Carefree. There is no desire to change the residential character, but instead to find complimenting pieces that provide a more balanced revenue stream to support the critical core services provided. At the high level, for comparative purposes, every million dollars of sales tax revenue brought into the Town is in lieu of a $500 property tax on residential property in Carefree. This shows the value of economic development and what the Town Council is trying to do with the economic development initiative. Steve Prokopek will do a deeper dive into the proposed General Plan amendment, why the Town is looking at it, and what it is trying to do to ensure it is compatible with the community and the surrounding residential neighborhoods.
https://vimeo.com/655190610
Lyn Hitchon
Prepared by Carefree Truth
Copyrighted
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.
Mr. Neiss noted that he often uses the example of a stool when referencing how the weight is balanced to pay for core services. Most "stools" have 3 legs; local property tax, sales tax, and State Shared Revenue which is a smaller portion of the overall revenue. Carefree's "stool" has only 2 legs. That's why Carefree is a nimble organization with only 16 staff members. He is so proud of Carefree's staff that is dedicated to serving this community, and has done so over the course of many, many years. Carefree has one of the smallest staffs in the state of Arizona. He said we should all be proud of the core municipal services provided by this staff.
The pie chart in the slide illustrates contributors to the sales tax revenue over the past 10 fiscal years. The piece of the pie that reads "Construction" constitutes 1/5 of the revenue. Construction sales tax revenue is a one time revenue, here today, gone tomorrow. Construction projects pay 3% of the contract in sales tax. The community is reaching build-out. There are not that many more properties to be developed. For the most part, Carefree is a residential community, and that will not change.
The biggest sales tax contributor over the past 10 years, approximately 35%, is retail, the piece at the bottom of the pie. The largest contributors are the big box stores. The local grocery store has been purchased by a grocer in California, and no one knows that grocer's plan. CVS is looking at closing and consolidating approximately 900 stores, which could have an impact on Carefree. These decisions are made in the private sector. It is the Town's fiduciary responsibility to consider and evaluate trends that will impact Carefree.
About 20% is attributed to restaurants and hospitality uses. Tourism is typically one of the largest drivers of the region and state economy, which is why the economic development initiative speaks of improving the town's hospitality position within the marketplace by finding complimenting pieces. The Town is not trying to change the fabric of who we are, but to compliment who we are.
Economic development is about building value. Carefree's original economy was designed to bring visitors into the community by flying them into the Sky Ranch airport, having them enjoy a stay at the Carefree Resort, perhaps playing a round of golf at the Desert Forrest golf course, providing nearby shopping at the small businesses that anchor the Town Center, and perhaps selling them a lot. As the town has matured, some of these uses were privatized, such as the airport and the golf course. The golf course had a reciprocal agreement with the Resort so they could provide a golfing experience to their guests who they were trying to attract and move out here.
Additionally, the public streets and supporting infrastructure were expanded, which all contributed to the cost to operate the town. Today, as the community reaches build-out, the cost to maintain the aging assets and address additional services requested by the next generation of Carefree residents continues to rise. With expanded costs to the Town, it's placed in a fiduciary role to look at opportunities to diversify its small tax producing portfolio and find complimenting pieces.
It is important to know that the the die has already been cast to the fabric of Carefree. There is no desire to change the residential character, but instead to find complimenting pieces that provide a more balanced revenue stream to support the critical core services provided. At the high level, for comparative purposes, every million dollars of sales tax revenue brought into the Town is in lieu of a $500 property tax on residential property in Carefree. This shows the value of economic development and what the Town Council is trying to do with the economic development initiative. Steve Prokopek will do a deeper dive into the proposed General Plan amendment, why the Town is looking at it, and what it is trying to do to ensure it is compatible with the community and the surrounding residential neighborhoods.
https://vimeo.com/655190610
Lyn Hitchon
Prepared by Carefree Truth
Copyrighted
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.