Tusayan Council approves $2 mil loan after budget barely balances
Town asks for community input for future capital improvement projects
TUSAYAN, Ariz. — After looking at its mid-year budget and realizing they were in trouble, Tusayan Town Council passed resolution 2020-02, approving a loan up to $2 million to fund capital improvement projects in Tusayan.
The need for the loan came after Home Rule was not passed by Tusayan voters in 2019.
In an attempt to recover, the town held a special one-time vote asking residents to override the original Home Rule decision. The override failed at the polls.
According to the town website, while the town had more than $7 million available invested in savings, and expected to receive an additional $4 million in sales taxes, the state imposed a limit of $1.4 million.
At the Feb. 12 town council meeting, staff and Town Manager Cynthia Seelhammer presented the mid-year budget. At $1.4 million, the budget barely allowed the town to break even during the 2019-2020 fiscal year and left the town unable to move forward with capital improvement projects.
At the meeting, Seelhammer presented the council its mid-year budget. Left as it was, the budget barely allowed the town to break even and did not allow the town to move forward with many capital improvement projects.
“Which means that the town would be right on the knife’s edge for the rest of the year as far expenditures go and would not have the funds available to pay for capital projects unless the town was willing to violate the state imposed spending limits,” Seelhammer said.
If the town violated the state limit, the state could impose a fine five times the excess expenditures or one-third of the state allocated income tax.
Seelhammer went on to explain the state does allow a process for a town, under the state expenditure limits, to finance its capital projects.
Tusayan currently has more than $9 million dollars in savings and the town’s revenue is almost $5 million annually, according to Seelhammer.
At mid-year, Seelhamer said Tusayan’s general fund expenditures were currently 40 percent expended. However, Seelhammer explained there were recent expenses that had come up that were not in the town’s budget. She said the town had set aside a contingency reserve for unforeseen expenses, however, the cost and time for some of these projects had not been anticipated.
“I don’t believe we knew last spring, when this budget was created, what it was going to cost and what it was going to take to complete the flood study and some of the other mitigation that was required by the county for the Ten X project,” she said.
Another unforeseen expense was a severance package for the previous town manager.
“Those are among the unanticipated expense that bring the budget to a very tight point here at mid-year,” she said during the meeting.
“Unfortunately because of the failure of the one-time override and the fact that we’re under the state spending limit, that means that the town has not been able to do the things that it has traditionally done – supporting the fire district, supporting the school district, making payments to the chamber of commerce etc.,” she continued. “All those had to be stopped.”
Tusayan Mayor Craig Sanderson stated that what voters wanted was to help decide which capital projects the town could afford.
“The argument against had to do with the voters said, ‘quit wasting our money,’ potentially, was my interpretation of what the failure of the override previously was,” he said. “Which put us in the predicament of being limited to a state imposed expenditure limitation. What they didn’t realize was that the imposed limitation doesn’t restrict towns and cities from doing what we just did and that is taking a loan in order to continue with capital projects.”
Sanderson said having the ability to continue projects that were important to everybody was important to the council. In order to do this, the council plans to vote on each project individually before moving forward.
“The next step is going to be to fund individual capital projects. Those require separate council approval,” he said. “The loan is basically just an approval to get the ball rolling.”
During the Feb. 12 council meeting, Bob Petzoldt, superintendent of the Tusayan Sanitary District, addressed the council, saying he had mixed feelings on the town borrowing money.
“I’ve never been in support of any borrowing of money that wasn’t connected to the health and safety of the community,” he said. “The only thing I can think of now is the flood plain issue.”
Petzoldt said if the council could assure the money would be spent toward immediate needs in the town, he would be more in supportive of it.
“If there’s a mechanism that we could staple to this, (something) to ensure the community that this is the way the money will be used,” Petzoldt said.
Petzoldt went on to say he knows of numerous immediate community projects the town needs. These include new fire department apparatus, community street lights, a park and completed flood detention basins.
“Right now the community thought that enough was enough and voted down the Home Rule,” he said. “You could get (a loan) paid off soon and do a lot of good now with the monies that you have now and you would not be rubbing the community – the constituants that voted for these things, you wouldn’t be rubbing them the wrong way.”
Sanderson said the town has distributed a flyer for community members to provide feedback about priority projects.
“To give us an idea of what capital improvement projects are important,” Sanderson said. “We’ll use that as a guidance to help make a decision in approving and funding capital projects. It’s a community based effort to decide what’s important for the community.”
The flyer is available at Town Hall, 845 Mustang Drive in Tusayan.
With the council decision, the town’s next step is to hire appropriate personnel to secure the loan. This could take up to a month or more to complete.
When the loan is finalized, councilmembers will then vote to approve funding for each project.