FY 2009 Tentative Budget Adoption July 15, 2008

1. Difficult Times and Difficult Decisions – A Brief History FY 2009 Tentative Budget AdoptionJuly 15, 2008 City Council Chambers 826 N. Main St. Cottonwood, AZ

2. Timetable – FY 2008 • September 2007 • July Sales Tax was down 26.95% over last year • Council was briefed of the situation • The City began making plans • Reduce costs • Hiring Freeze • Postpone capital purchases • November 2007 • Council suspended Longevity Plan • December 2007 • Plans get underway for new FY 2009 budget

3. Timetable – FY 2008 • February 2008 • Budget Season gets underway • March 12, 2008 • Council Goal Setting Meeting • Discussed Major Revenues • Made changes to 1% sales tax distribution • Eliminated allocation for Sewer Facilities • Shifted monies to General Fund and Streets • Postponed contributions to Capital Accumulation Fund (CAF) • Shifted to General Fund operations & maintenance

4. Budget Season Gets Underway • Budget begins to take form • Revenues are projected by Finance • Expenditures projections are made by departments using these guidelines: • Base budget – only those costs necessary to keep current services • No new staffing or reclassifications • No new programs or projects • No capital expenditures

5. Budget Shortfall MeetingEmergency Departmental Meeting • $2,297,465 shortfall & plan • Administrative Responsibilities • No capital outlay • No additional new programs • No additional staffing or reclassifications • No additional outside agency support • At this point there were no planned cuts in current services funding • Reduction in overtime (mostly Public Safety) • Suspend Continuing Education for employees

6. Budget Shortfall MeetingEmergency Departmental Meeting • $2,297,465 shortfall & plan • Legislative Responsibilities • Eliminate contributions to Outside Agencies • Senior Center • Old Town Association • Youth Commission • Reduce or eliminate contingency accounts • Change our Travel Policy • Change our Cellular Phone Policy • Move Capital Sales Tax to operations & maintenance

7. Budget Shortfall MeetingEmergency Departmental Meeting • $2,297,465 shortfall & plan • Additional Reductions • Departments under $500K – 5% reduction • Departments over $500K – 8.5% reduction • Postpone Building Communities Grants • At the end of the day the City was still nearly $600,000 short of goal Decision was made to go to Council for additional direction

8. Pre May 29th Meeting • Departments prepared budgets as instructed • Departments under $500K – 5% reduction • Departments over $500K – 8.5% reduction • New budget numbers were compiled • Concerns were discussed with mgmt • Impact projections were prepared in advance of the May 29th meeting

9. May 29th Council Meeting • Revenues were discussed • Sales Tax • State Shared Revenues • Large dealership moves out of town • Budget is discussed • Steps taken to reduce base budget • Shortfall remaining • Possible impacts of reduced budget • Tax Structure

10. May 29th Council Meeting (cont) • Steps taken to reduce base budget • Personnel issues • Cut staffing • Eliminated Cost Of Living Adjustment (COLA) • Reduced Overtime by 25% (mostly in Public Safety) • Reduce pool and weight room hours • Affects Mingus High School most of all • Affects a group of lap swimmers and evening swim programs • Reduce book budget and open hours for the Public Library

11. May 29th Council Meeting (cont) • Steps taken to reduce base budget • Reduced contractual services • Custodial • Weeding and insect control • Reduce or eliminate recreational programs • Rhythm & Ribs • Farmer’s Market • Concert Series • Reduce travel and training, and employee continuing education

12. May 29th Council Meeting (cont) • Possible impacts of a reduced budget • Eliminate support to outside agencies • Increased response time from Public Safety • Deterioration of vehicles due to lack of scheduled maintenance • Loss of “Quality of Life” programming • Ill maintained or close parks • Reducing hours at the Library • Closing the Dog Park

13. May 29th Council Meeting (cont) • Possible impacts of reduced budget • Deterioration of buildings due to lack of maintenance • Harm outside agencies • Increased liability costs • Lack of Operations & Maintenance for Recreation Center & Library

14. May 29th Council Meeting (cont) • Tax structure comparison • Used Yavapai communities • Compared sales and property taxes • Cottonwood sales tax rate is below 50% of communities • Cottonwood is only community with no property tax for a municipal function • City • Special District • Fire District

15. Clarkdale, Az

16. Camp Verde, Az

17. Jerome, Az

18. Sedona /Oak Creek

19. Cottonwood – In Fire District

20. Cottonwood, Az – Outside Dist.

21. Current Property & Sales TaxComparison • Cottonwood has the lowest property tax • Second lowest sales tax • Last column shows average additional household spending to make up the property tax

22. May 29th Council MeetingCouncil Directives • Directed staff to budget sales tax with an additional 0.8% • Keep expenditures at base budget and limit expenditures • Continue support for outside agencies • Minimal capital expenditures that use O&M funds

23. May 29th Council MeetingUse of fiscal responsibility • All capital purchases are minimal and will be scheduled • Minimal additional staffing and reclassifications • Already have changes in Financial Operations Guide policies: • Wireless Communication Device Policy (currently being implemented) • Travel Policy (already in place) • Less patrol cars driving and more use of the Mobile Data Terminals(MDTs)

24. May 29th Council MeetingUse of fiscal responsibility (cont) • Items that need to meet revenue estimates • Cost of Living Adjustment is delayed until 01/2009 • Compensation Study delayed until last fiscal quarter of 2009 • Compensation Study implementation is delayed until 1st quarter FY 2010 • Will be back to the Council in November with Major Revenue update

25. Common Misconceptions • .8% sales tax means 8/10th on each dollar, not 8¢ on each dollar • $285,000 for new transit buses are 93% grant funded – City cost is $19,950 • Additional staffing is most grant funded or funded by the enterprise funds • Additional battalion is 75% funded through a Federal grant • Cottonwood Area Transit (CAT) driver is mostly funded by Arizona Department of Transportation (ADOT)

26. Utilities Highlights • Bella Montaña Water Reclamation Facility $5,565,000 • Highway 260 Water/Sewer Line Construction $3,400,000 • Arsenic Mitigation $1,950,000 • Water/Wastewater upgrades $3,068,000 • Water Storage • Improved Fire Flow • Collection System Master Plan

27. Streets Highlights • Pavement Preservation $350,000 • Willard St. Extension $910,000 • Begins Construction within weeks • Paula St. Reconstruction $345,000 • In design phase • W. Mingus Reconstruction $1,030,000 • Will be designed this year • Construction to begin next summer

28. Streets Highlights • 12th St. Reconstruction $460,000 • Birch St. to Mingus Ave. (in design this year) • Funded by a Community Development Block Grant-CDBG • 12th St. Reconstruction $1,595,000 • 89A to Fir St. (in design this year) • Initially Highway Expansion & Extension Loan Program • Northern Arizona Council of Governments Grant • Street Contingency & Sidewalks $725,960

29. Other Highlights • Airport Improvements $660,000 • 95% Grant Funded • 2.5% State Funded • 2.5% Local Match • Library Expansion $784,420 • Greater AZ Development Authority Loan • Land Acquisition $675,000 • Greater AZ Development Authority Loan